The stock of deposits* held by Romanian banks expanded by 10.7% y/y to RON 216.5bn [EUR 48.1bn] at the end of February, the central bank reported.

In terms of euro, the stock of bank deposits increased by 7.6% y/y. They already exceeded by 25% the pre-crisis peak level.

The non government sector’s net balance** with banks improved by EUR 5.8bn on the year to a deficit [net loans] of EUR 0.4bn – which is very small compared to the overall deposits and loans of nearly EUR 50bn for the whole banking system. At the outset of the financial crisis, in October 2008, the net banking loans of the non-government sector amounted to EUR 14.3bn. While loans have rather stagnated, deposits surged visibly meanwhile.

CORPORATE LENDING IS LOSING GROUND. The non-financial corporate sector has improved its net position vis-à-vis banks significantly over the past year, with net loans contracting by EUR 4.1bn to EUR 9.3bn. While the stock of loans contracted by 7.1% y/y to EUR 25bn, the corporate bank deposits expanded by 16.1% y/y to EUR 15.7bn.

BANKS HAVE IMPROVED LOAN-TO-DEPOSIT RATIO ON HOUSEHOLD SAVINGS. After the major correction in the past five years, the households’ positive net balance with banks is stagnating. The household bank deposits remained constant on the month in February, at EUR 28.3bn. The decreasing deposit interest rates, along with the certain increase in the propensity to spend, are expected to push down the rise in the savings rate in the medium run. On the year, the deposits were a moderate 3.7% up [against a 7.6% y/y average rise for the non-government sector]. The improvement in the households’ balance with banks will predictably come in the future from lower stock of loans, amid re-payment of existing loans and scarce borrowing.

The households’ net balance with banks has improved by EUR 1.7bn on year, to a EUR 6.4bn surplus at the end of February. In October 2008, at the beginning of the credit crunch, households were net borrowers with EUR 4.7bn net bank loans. Of the EUR 13.9bn improvement in the non-government sector’s balance with banks since Oct 2008 [to a negative EUR 0.4bn], households contributed EUR 11.1bn. The foreign financial groups were thus able to diminish their exposure to Romania exactly because of the household deposits building up.

* of non-government customers

** deposits minus loans