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 (

one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him. ” any regulatory ratio is structured on the basis of the definitions of what should eligible for calculation purposes, both in the ratio ’ s numerator and denominator, and of the level it should reach. the new regulations have changed these three elements of the ratio : ( i ) the numerator shows a figure for capital calculated in keeping with a new, much more demanding definition ; ( ii ) the way in which risks are translated into weighted assets has been changed in the denominator and various caveats have been added regarding the use of internal models ; and finally, ( iii ) the required ratio level has been raised considerably, and additional " buffers " have been added, inter alia, to cover the risks systemic institutions evidence. 7 / 13 while the capital ratio is important, it is not by any means the only significant measure. the crisis has shown that focusing solely on one metric may be counter - productive. thus, other elements have been added. these complement the classic solvency metric, and relate to banks ’ liquidity or leverage. moreover, the focus has been placed on banks ’ business model and governance. lastly, specific remunerative arrangements have also played a significant role in encouraging short - termist behaviour. one rather controversial novelty, especially in investment banks, has been to introduce ceilings on and restrictions to credit institutions ’ remunerative policies, the aim being to correct or, at least, mitigate certain perverse incentives. supervisory changes yet despite all these regulatory changes, we must be aware that no rules can stand in for proper supervision. the role of supervision remains essentially the same : it is preventive. it is usually said that july and august forest fires are controlled and extinguished in the preceding months of march and april. at this earlier time, scrub is cleared and firewalls are set in place, enabling the future advance of the flames to be controlled. if the homework is not done in the spring, we pay the consequences in the summer. likewise, the fundamental role of the supervisor is to prevent. this means ensuring that, during upturns in the economy, the lending granted by banks has been correctly analysed and its price set so that the risks assumed are covered. that prevents excessive growth in lending that may lead to bubbles emerging. sadly