Bank lending in RO continues to go down in May

The stock of non-government bank loans in Romania shrunk by 0.7% in May compared to April, decreasing for the second month in a row to RON 269.1 billion (EUR 55.6 bln). At the end of April, the stock of bank loans had decreased by 0.6% compared to end-March.

Individuals and firms hit by the economic crisis were allowed to suspend their loans’ repayment until the end of this year, which prevented an even steeper decline in the stock of loans.

The annual growth in the stock of loans gradually eased from 7.6% year-on-year in February to 4.5% year-on-year in May, and the outlook is not bright.

For the second half of the year, banks plan to tighten the lending terms, particularly for households (consumer loans) and small and medium enterprises (SMEs, short-term loans).

These two categories are the most lucrative segments in the banking market - the former one because of the substantial increase seen over the past years and its resilience demonstrated in May and the latter because of the state guarantees extended under the IMM Invest program.

While the bank lending lost momentum in all segments in April - in the first full month under lockdown, this was not the case in May.

The local currency lending to households notably returned to positive growth in May (+0.2% month-on-month).

Compared to last year, the portfolio of local currency retail loans was 11.6% larger, while the local currency corporate loans went down by 1.6%.

Despite the lower and uncertain income, local households borrowed another RON 250 million (EUR 50 mln) in net terms in May alone while their bank deposits increased by some RON 28 mln (EUR 5.8 mln) in the same month (considering only local currency loans and deposits).

(Photo: Octav Ganea/ Inquam Photos)