The Bulgarian credit market eked out an anemic increase of slightly over 0% in August in a sign that unclogging could be tougher than expected, showed the latest figures of the Bulgarian National Bank (BNB).

The combined corporate loan portfolio of local lenders inched up by 0.06% from July, reaching BGN 19.1 million, while household loans edged down by 0.11% to BGN 20.6 million as most borrowers took on new debt to pay down existing credits.

Housing loans ticked up by BGN 858,000 as consumer loans shed BGN 11.1 million.

The growth rate slowed down on an annual basis, too, with business loans decelerating to 4.3% from 33.1% for the entire 2008 and consumer loans gaining 2.8% versus 25.1% last year. Only home loans kept up the double-digit pace, adding 12.1% against a faster 38% in 2008.

At the end of August, corporate loans amounted to BGN 30.471 billion, consumer loans BGN 7.253 billion and housing loans BGN 8.064 billion.

Bulgarian banks’ reckless enthusiasm to pore out loans was cooled down by the credit crunch, which reduced funding from foreign parents to a trickle and forced companies to put off or even drop projects until the economic storm dies down. Moreover, consumers snapped up the purse strings, provoking an all-out war by banks to attract their savings. But after the first green shoots of recovery sprouted in Europe and the US, local lenders opened September with lower interest rates on new loans, which are expected to bring a gradual surge in lending volumes.