The stock of bank loans to non-government customers in Romania decreased 2.4% y/y to RON 221.66bn [EUR 50.6bn] at the end of May, the central bank reported. In terms of euro, the annual decline was only 0.6% y/y.

The stock of loans has remained constant for nearly two years at slightly above EUR 50bn – which is more or less the level of bank lending at the onset of the credit crunch in late 2008. In the meantime however, the share of bad loans increased dramatically to the point where a quarter of the bank loans falls into the loss category, namely those for which installments are overdue more than 90 days, or debtors are insolvent.

Mortgage lending remains the most active area due to the government guarantees extended to young families. The stock of mortgage loans to households increased by 8.2% y/y [10.3% y/y in euro] at the end of May. Its share in total loans to non-government increased to 17.1% from 10.6% at the end of 2008.

On the opposite, consumer loans decreased 9.4% y/y [7.7% y/y in euro] and their share in total loans lessened from 37.2% at the end of 2008 to 25.2% - which is still a very high ratio. Loans to non-financial companies edged down 2.3% y/y [0.4% y/y in euro] and their share in total loans increased slightly to 52.3% from 47.7% at the end of 2008.

The loan-to-deposit ratio for the non-government customers was 110% at the end of May – steady from end-April and down from 117% at end-May 2012.