THE BULGARIAN commercial lender Bulgarian American Credit Bank (BACB), in which AIB has a 49.99 per cent stake, has reported net profit of €12.1 million for the six months to the end of June.

This is a fall of 23.4 per cent compared with the equivalent period in 2008 when consolidated net profits were €15.8 million, reflecting higher impairment provisions and lower fee and commission income.

A deterioration in loan quality has seen the bank increase its impairment provisions to €5.3 million and said during the first half of the year loans in arrears over 90 days had increased from 5.8 per cent to 9.4 per cent.

Total assets at the end of June were €404 million, down from €398 million in June 2008 and its loan book grew 1.1 per cent to €349.7 million during the first half.

The bank said it was operating efficiently despite a one percentage point increase in its cost to income ratio to 14.9 per cent.

BACB reported an annualised return on average equity of 23.8 per cent, down from 38.3 per cent in June last year.

AIB purchased its stake for €216 million in cash in February last year as part of its expansion into Europe.

BACB was set up in 1991 as part of an initiative by the US Congress to encourage investment in Bulgaria and listed in 2006.