The overall non-performing loan (NPL) ratio in Romania’s banking sector reached 11.3% in June this year, said Florin Danescu, executive president of the Romanian Banking Association.

The indicator halved compared to the maximum level reached in the post-crisis period as local banks cleaned off their balance sheets, reports local Agerpres. The methodology for calculating the non-performing loans has also changed.

In 2015, the bad loan ratio amounted to 13.6%, down 7.1 percentage points compared to 2014. Half of the non-performing loans are generated by insolvent companies, said Florin Danescu. In the case of small and medium-sized enterprises, the NPL ratio totaled 31.5% at the end of last year.

Banks are prudent in crediting the real sector of the economy, due to the lax financial discipline and the improper use of insolvency proceedings in certain situations by companies, Danescu said. He added that solutions should be sought to finance small and medium-sized companies, either through capitalization or programs that could increase the partners’ trust level.

editor@romania-insider.com