Romania’s bank loans overdue hits 1.5-year high

The number of Romanians with bank loans overdue for at least 30 days rose in April to the highest level since September 2016, central bank data show, as rising credit costs strained borrowers’ capacity to stay current on their debt.

The number of individuals incurring debts overdue more than 30 day increased from 684,782 in March to 693,440 in April, according to Romania’s central bank (BNR).

However, the total amount of past-due debts declined in April by RON 386 million to RON 7.05 billion, out of which RON 3.9 billion have delays of more than 90 days and almost RON 1.5 billion are under collection.

The data were collected from 32 banks and 33 major non-banking financial institutions (NBFI) by the Credit Bureau.

This sharp increase in bank loans overdue comes in a period of rising credit costs. Romania’s three month money market rate (ROBOR), the main indicator that sets the interest rates for RON currency borrowers, reached on Wednesday and Thursday a new record of the last three years and seven months of 2.87 percent.

The ROBOR 3M calculated for June 7, 2018, is the highest since October 14, 2014. The 3M rate rose by 0.02 percentage point from the previous market session.

Compared with the end of 2017, the 3-month index rose by 0.82 percentage points, from 2.05 percent.

On May 7, Romania’s central bank raised the monetary interest rate from 2.25 percent to 2.5 percent, the highest level since February 2015, in line with economists’ expectations, who see the decision as a consequence of upward revision of the inflation forecast.

Experts estimate the 3-month money market rate will continue to grow until the end of this year, approaching 3 percent, if BNR rises the monetary policy interest rate to 2.75 percent in 2018.