Following its earlier confirmation of Bulgaria's credit rating at Baa1, Moody's has revised the outlook for the country's banking sector from stable to positive.

The rating agency attributes this optimistic outlook to several key factors, including Bulgaria’s strong economic growth and the persistently low interest rates. These conditions continue to create business opportunities while maintaining a robust quality of banking portfolios. Furthermore, the anticipated entry into the eurozone in early 2026 is seen as a positive development, enhancing integration with the monetary union, eliminating currency risk for banks, and enabling the Bulgarian National Bank (BNB) to offer liquidity when necessary, thus mitigating financing risks.

Despite these positive indicators, Moody's also highlights potential cyclical risks, such as accelerated mortgage lending and rising property prices. However, the agency notes that the BNB's regulatory measures have effectively curtailed high-risk housing loans with excessive servicing costs. Moody's expects capital levels within the banking sector to remain strong. While profitability is projected to decline in 2025 due to falling interest rates, it will still remain significantly higher than the EU average. The eventual eurozone accession is expected to boost the sector’s profits further, as banks will be able to invest excess liquidity, which is currently held at the BNB at zero interest.