on loan repayments by businesses and households. at the same time, credit activity not only did not stagnate, but increased. according to the latest data from the 2021 monetary statistics, loans to businesses and households grew year - on - year by 4. 1 % and 12. 5 %, respectively. good operational performance was underpinned by progress on important strategic tasks. october 2021 marked the one - year anniversary of the country ’ s accession as a full member to the european banking union. the assessment of this participation by both the ecb and the bnb is unequivocally positive. this assessment has to be seen outside the narrow context of the banking sector. first, it shows that bulgaria can be a successful and full participant in euro area institutions, given that the banking union is the first such institution in which the country has participated ; and second, it is a good example of institutional development to be followed in an environment of still serious institutional deficits. in 2021, we also marked one year since the bulgarian lev joined the eu exchange rate mechanism. this participation confirms and further proves the currency stability of the country. another important strategic aspect is the consolidation process continuing in our banking sector. this process follows global trends of seeking to streamline the structure and efficiency of the banking sector in the light of increasing competition and the pressure by new providers of 1 / 3 bis central bankers'speeches financial services, as well as rising costs of complying with regulatory and legal norms. in spite of the difficult and complicated environment created by the pandemic, in 2021 we saw the biggest acquisition, in terms of size and price, in the bulgarian banking sector. a deal like this i s the most accurate market evaluation of the condition of the banking sector and its attractiveness to strategic investors. therefore, the sector stayed in very good shape and so far succeeded through the pandemic. now our focus must shift onto meeting the challenges of the year 2022, keeping the strategic context, namely the process of bulgaria ’ s accession to the euro area, in which the banking sector will play a key role. in general, we expect that the macroeconomic environment in 2022 will be a little more favourable, but not less challenging. although we are at the peak of another wave of the covid crisis, we suppose that the negative health effects would subside and lessen over the year and, consequently, measures restricting the economic activity would be eased and become more flexible. such a development would

their sound governance and the bnb ’ s focused conservative policy over the years. the available buffers plus the measures taken since june by both the bnb and the government, as well as by the banks, helped safeguard the banking and the overall financial stability in the country. this way, the ktb crisis remained an isolated case and did not affect the operation of the rest of the banking sector. a proof of this is the depositors ’ behaviour who continued to entrust their savings to the banks despite the occasionally irresponsible public speaking against the banking sector and the incessant public attacks on the bnb. only household deposits picked up by bgn 2. 8 billion ( 7. 8 % ) annually to october, exceeding the stock of deposits in may ( the last month before placing ktb and cb victoria under special supervision ). this clearly indicates restored confidence in the system. besides, the banking system is about to end the year with excellent capital adequacy and liquidity indicators. i say the banking system, meaning all banks, excluding ktb and cb victoria. as at september, the total capital adequacy ratio stood at 22. 16 %, and only tier 1 capital ratio was 19. 91 % ( just to remind you that the eu provisions in the new basel capital accord, also known as “ basel iii ”, require 8 % total capital adequacy and 6 % tier 1 capital ratio, respectively ). the liquid assets - to - liabilities ratio in the banking system as at october reached 29. 75 %. in 2014 the share of non - performing exposures past - due for more than 90 days has continued to stabilise. at the end of october this year, at system level, their book value was 10. 62 % of the system ’ s loan portfolio book value ( i. e. practically the same as at the end of 2013 when their share was 10. 28 % ). the balance - sheet share of non - performing exposures reflects the already provisioned risk through the impairments already made. the provisioning level itself is high, with a total of bgn 5 – 6 billion provisions in the form of impairments allocated by the banking sector under ifrs until october. the banking system continues to generate profit, which is a source of additional capitalisation and is thus a reserve for maintaining stability. we expect the sector to end 2014 at a positive financial result of circa bgn 700 million (