Bank lending losses stem in Romania without government-backed schemes

The annual increase of the stock of bank loans in Romania has eased gradually from 6.4% y/y in December to 5.7% y/y in January and 4.9% y/y in February (to RON 384 billion or EUR 77.3 billion), according to data published by the National Bank of Romania (BNR).

Thus, the annual growth of the stock of bank loans is still below headline inflation, which was 7.2% year over year in February.

From an annual perspective, corporate lending preserves the leading role in the overall nominal advance of the stock of bank loans with a total contribution of 3.7 percentage points (pp) to the general 4.9% y/y advance. This largely reflects the government-backed guarantee schemes, which were not active in January-February when the balance of corporate lending lost stem and banks turned their attention to retail customers.

Local currency corporate loans increased by 5.7% y/y to 28.6% of the total at the end of February (making a 1.6pp contribution to the overall 4.9% advance of the stock of loans), while the forex corporate loans advanced by 8.4% y/y to 25.9% of the total (+2.1pp contribution). However, both stocks of corporate loans, expressed in local and foreign currency, decreased in each of the two months of 2024.

The stock of retail loans expressed in local currency increased by 5.4% y/y to 4.1% of the total bank loans at the end of February, contributing 2.2pp to the 4.9% overall rise of corporate loans. The stock of loans in this market segment increased in each of the first two months of 2024.

However, households tend to avoid forex borrowing, with the stock of such loans decreasing by 14.2% y/y to a slim slice of 5.4% of the total bank loans.

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