Changing trend? Overdue bank loans in Romania rose in the first 2 months of this year after a long period of decline

Sorin Melenciuc 28/03/2019 | 14:10

Overdue bank loans in Romania rose in the first two months of this year after a long period of decline, a trend that confirms the maturity phase of the post-crisis economic cycle, experts say.

According to the National Bank of Romania (BNR), overdue bank loans increased for the second month in a row in February, with a monthly rate of 2 percent to RON 7.8 billio.

This situation “confirms the maturity phase of the post-crisis economic cycle,“ Banca Transilvania analysts said in a recent report.

Loan outstanding rate rose from 2.99 percent in January to 3.06 percent in February, the highest level since October, with the following distribution: 3 percent for RON loans and 3.2 percent for foreign currency loans.

“We expect the gradual increase of the overdue loan rate in the coming quarters, amid the evolution of the economy below the potential rhythm and distortions in the sphere of economic policy,” Banca Transilvania analysts indicate.

Record profits

The 34 banks operating in Romania have registered at the end of last year the highest assets in history, as improved credit demand combined with low NPL rates have boosted assets and earnings, central bank data show.

The total bank assets in Romania increased by 5,4 percent year-on-year in December, up to RON 451.1 billion (EUR 96.7 billion), equal to around 48.3 percent of the estimated GDP in 2018.

The improved results of Romanian banks are due to a sharp decline of non-performing loans (NPL) ratio, from 6.41 percent in December 2017 to 4.95 percent – the lowest level since 2009 – in December 2018, according to central bank’s data.

But banks still struggle to find clients for their loans, as loan-to-deposit ratio key-index has continued to decrease – from 74.7 percent in December 2017 to 73.6 percent in December 2018, despite higher consumer and mortgage loans’ demand from individuals.

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Sorin Melenciuc | 27/03/2024 | 17:32
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