Loan portfolio quality looks bright in Romania as repayment moratorium is extended

The total value of the Romanian households' and companies' overdue loans in the local currency amounted to RON 4.42 billion (EUR 910 mln), at the end of December 2020, down by 4.83% compared to the end of November and 3.4% lower compared to the end of 2019.

The overdue foreign currency loans decreased by 3.6% month-on-month while plunging by 22% year-on-year to the equivalent of RON 1.61 bln (EUR 330 mln), according to data from Romania's National Bank (BNR), Agerpres reported.

However, the debtors hit by the crisis received a 9-month loan repayment moratorium that they can still apply for, if they didn't already, by the end of March. This is a key element that kept under check the non-performing loan ratio.

The total loans in local currency reached RON 197.0 bln in December (+8.7% year-on-year), of which RON 74.0 bln were contracted by economic agents and RON 118.7 bln by the population. This puts the share of overdue loans to 2.2% of the total stock of loans at the end of December 2020, down from 2.5% one year earlier. The share dropped to 1.8% for the foreign currency loans, down from 2.4% one year earlier.

The figures are different from the non-performing loans (NPL) ratio as reported by banks, as the overdue loans are defined as the loans for which monthly installments are overdue more than one day at the end of the month.

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