Romanians continue to borrow in RON but move savings in hard currencies

Bank loans in RON granted to individuals rose by 1.4 percent month-on-month and by 20 percent year-on-year in October, up to a fresh all-time high of RON 94.2 billion (EUR 20.2 billion) despite higher interest rates but Romanians prefer keeping savings in hard currencies, according to National Bank of Romania (BNR) data released on Monday.

Bank loans granted to individuals and corporate clients in Romania rose 6.8 percent year-on-year in October, to RON 249.6 billion (EUR 53.6 billion), while the amount of deposits increased by 9.2 percent, to RON 317.4 billion (EUR 68.1 billion).

RON-denominated non-government loans, which include loans granted to individual clients and companies, grew by 13.6 percent year-on-year in October to RON 163.4 billion.

During the same period, forex-denominated loans declined by 4.1 percent, to RON 86.2 billion-forex equivalent, due to stricter rules regarding forex bank loans.

Bank deposits have become less attractive this year as a consequence of low interest rates and rising inflation (4.3 percent in October).

RON-denominated deposits of residents (individual clients and companies) rose by 0.7 percent month-on-month to RON 210.1 billion but the annual growth rate slowed to 6.9 percent, from 7.5 percent in September or 8.5 percent in July, central bank data show.

Forex-denominated deposits rose by 1.2 percent month-on-month in October to RON 107.3 billion-forex equivalent, and by 14.1 percent year-on-year.

During the last couple of years, Romania’s bank clients increased their creditor status against banks due to strong savings and weak credit market, deposit holders being technically the banks’ creditors.

In October, bank deposits exceeded loans by 27 percent, as credit market is still affected by low demand, experts say.