Romania’s central bank official encourages corporate lending

Romania’s financial intermediation is the lowest in the European Union, but the banks’ financial soundness and profitability are above respective averages; therefore, the banks can boost corporate lending, argued Florin Georgescu, first vice-governor of the National Bank of Romania (BNR).

He explained that the banks can manage potential adverse external developments and have enough capital and liquidity resources to continue lending to the real economy.

"There is room for banks to support financial intermediation by finding solutions, including to reduce the cost of loans, especially when it comes to investment loans, just like the state authorities have found solutions through programs such as IMM Invest," according to Florin Georgescu, quoted by Ziarul Financiar.

The stock of corporate loans increased by some 6% y/y to RON 212 billion (EUR 42.4 billion/USD 45.4 billion) as of the end of March.

The stock of corporate loans increased by 6.6% y/y to RON 111.5 billion (EUR 22.3 billion/USD 23.86 billion) for local currency and by 5.2% y/y to RON 100.4 billion (EUR 20 billion/USD 21.4 billion) for foreign currency.

At the same time, nominal GDP rose by 13.4% y/y to some RON 1,740 billion in 2023 and is expected to advance by 9.4% y/y this year, according to the state forecasting body.

The financial intermediation defined for the corporate segment will keep deteriorating unless lending gains momentum in the coming months. The government-backed scheme IMM Plus may result in extra loans in the amount of RON 12.5 billion – or some 6% above the current stock of loans. It is an important support for financial intermediation, but the banks should take more risk, particularly as they can not increase the share of state debt in their portfolios indefinitely.

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