Bank loans up 7.6% in Romania driven by household borrowing

The stock of bank loans extended by Romanian banks to the non-government sector increased by 7.6% year-on-year to RON 256.5 billion (EUR 54 billion) as of the end of April, a pace close to the 7.7% advance posted one month earlier.

The growth rate is notably higher than the headline annual inflation (4%) or the broader definition of the prices (GDP deflator, projected at 3.5% this year), but lower when compared to the nominal increase of the GDP (projected to ease to 9% this year from 10% in 2018). Therefore, the credit expressed as a share of GDP keeps sliding.

By the type of debtors, the volume of loans expressed in local currency extended to households soared by 15.3% year-on-year to RON 98.6 billion. For comparison, the corporate local currency loans advanced by only 5.5% year-on-year to RON 70.7 billion. When it comes to foreign denominated loans, the corporate lending is significantly more dynamic (+10.4%, to RON 50.4 billion at the end of April), while the stock of forex loans to households shrinks (-8.3% year-on-year to RON 36.8 billion).

Another notable pattern revealed by the April monetary figures is the steep rise of the volume of deposits held in foreign currency (+15.5%, compared to +7.2% rise in the stock of local currency deposits) -- which means that the households, where the differential is even wider, but also companies expect local currency weakening or at least prefer not to risk.

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