The volume of new loans extended by banks in Romania increased by 5.2% y/y to RON72.3bn (€15.82bn) according to bne IntelliNews calculations based on central bank data, but this was still not much above half of the €29bn extended in 2007-2008 before the global credit crunch.
Mortgage lending has migrated from corporate to retail following the launch of the government-guarantee scheme, Prima Casa. The retail mortgage lending stands out by its 50% increase versus 2008. In 2017, banks extended €2.76bn loans to households to buy a home, compared to only €1.8bn in 2007-2008 when the real estate prices hit their highest levels.
The much stronger retail mortgage lending in 2017 (and in the years before) compared to the pre-crisis levels reflect the effects of the Prima Casa programme, launched in 2009 with a view to stimulating the residential real estate market. It is very likely that banks’ exposure to the entire mortgage segment (retail and corporate) has in fact not increased, but the (corporate) mortgage loans previously (before 2009) extended to developers have been replaced by retail mortgage loans.
Indeed, the volume of corporate lending decreased to €8.73bn in 2017, only 46% of the €19.06bn extended to firms in 2008, and the deep plunge is likely to include much fewer loans extended to developers. The financial problems faced by some major developers and the gloomy market outlook after 2008 made banks more cautious with financing large-scale luxury residential projects. Much more price-conscious housing was developed after 2008 and the design of the Prima Casa (primarily aimed at helping young families buy a first home) has driven the shift of the financing from developer to end-user.
Volatile consumer lending is gaining momentum but it is still far from the pre-crisis euphoria. Consumer lending in 2017 was €4.11bn, only 55% of the volume seen in 2007 — but still more than twice the volume seen in 2012-2013 when retail lending hit the lowest levels in the past decade. The rising interest rate is set to prevent a significant increase in consumer lending in the coming years, after banks boosted the turnover of this segment from €1.6bn in 2012 to €4.0-4.1bn in 2016-2017.
|New Loans||RON mn||95,230||107,332||72,871||74,619||70,405||44,361||44,302||51,056||66,036||68,755||72,304|
|New loans to households||RON mn||36,072||37,148||12,605||17,586||21,021||14,122||14,265||18,370||28,097||30,207||32,373|
|New loans to households, consumer||RON mn||28,434||27,450||8,052||10,226||13,427||7,224||7,502||10,531||15,696||17,816||18,795|
|New loans to households, mortgage||RON mn||6,176||6,767||3,793||6,593||6,640||5,983||6,062||6,989||11,718||11,623||12,643|
|New loans to firms||RON mn||59,158||70,184||60,266||57,033||49,382||30,236||30,026||32,677||37,918||38,539||39,902|
|New Loans||€ mn||28,552||29,146||17,187||17,715||16,608||9,948||10,025||11,490||14,856||15,310||15,817|
|New loans to households||€ mn||10,815||10,087||2,973||4,175||4,959||3,167||3,228||4,134||6,321||6,726||7,083|
|New loans to households, consumer||€ mn||8,525||7,454||1,899||2,428||3,167||1,620||1,698||2,370||3,531||3,967||4,114|
|New loans to households, mortgage||€ mn||1,852||1,838||895||1,565||1,566||1,342||1,372||1,573||2,636||2,588||2,764|
|New loans to firms||€ mn||17,737||19,058||14,214||13,540||11,649||6,780||6,795||7,354||8,530||8,582||8,728|
|source: BNR, bne IntelliNews|