Romania’s stock of bank loans keeps shrinking, down 2.6% y/y at end-Aug

By bne IntelliNews September 25, 2013

The stock of bank loans to the non-government sector in Romania edged up marginally on the month by 0.2% to RON 221.9bn [EUR 50bn] at the end of August - yet lagging by 2.6% on the year, the central bank announced. The monthly advance in August was a result of the short-term exchange rate volatility but on a broader perspective the local currency has remained rather stable nominally and the annual contraction of non-government loans is pretty comparable when expressed in either local currency [2.6% y/y] or foreign currency [2.1% y/y].

The stock of non-government loans has contracted by EUR 1bn [2% ytd] in Jan-August this year after already narrowing by EUR 0.6bn in 2012. The downward pattern seen over the past two years follows another two-year credit expansion period in 2010-2011. Overall, the stock of non-government loans remains below the EUR 52.7bn peak reached at the end of October 2008, before the credit crunch.

Mortgage lending to households has increased significantly by 11.2% y/y to EUR 9bn at the end of August and accounts for 17.2% of the total bank loans [17.9% of non-government loans]. Mortgage lending, supported by the government guarantees programme, has partly offset the major 10% y/y decline in the stock of consumer loans that reached EUR 12.2bn at the end of August. Mortgage loans more than doubled from the EUR 5.2bn at end-Oct 2008. Consumer loans were nearly EUR 20bn before the credit crunch at end-Oct 2008. But even more concerning is the 2.5% y/y contraction in corporate lending. The interest rate cuts over the past months have pushed up the stock of local currency corporate loans by 2.4% y/y – but this slim improvement was insufficient to maintain the overall stock of loans to non-financial corporations on a positive annual trend.

LOANS EUR bn Household Household:  Household:  Corporations:  Non-govt Govt TOTAL
[eop] total consumer mortgage non-financial      
Dec-08 24.89 18.49 5.24 23.72 49.7 1.57 51.27
Dec-09 23.7 17.22 5.73 22.75 47.27 2.67 49.95
Dec-10 23.83 14.99 6.76 24.42 48.85 2.62 51.47
Dec-11 24.14 14.35 7.73 26.71 51.63 2.24 53.87
Dec-12 23.59 13.1 8.37 26.81 51 2.23 53.24
Aug-13 23.27 12.22 8.97 26.12 50.01 2.18 52.2
% of total 44.6% 23.4% 17.2% 50.0% 95.8% 4.2% 100.0%
y/y -1.8% -10.0% 11.2% -2.5% -2.1% 0.5% -2.0%
Source: BNR


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