Banks in Romania see robust demand but are tightening lending terms

The demand remained strong on the Romanian credit market from April to September, particularly in the corporate segment, reveals a regional poll conducted by the European Investment Bank (EIB) among 12 international banking groups operating in the region and 70 branches and local banks.

Banks in Romania remain optimistic about growth in credit demand in the next six months. The expected increase in demand likely reflects the strong wage and profit growth recorded in 2022, which almost kept up with inflation.

However, the banks argue that the lending terms had to be tightened, and the profitability of the banking system began to deteriorate, in line with the regional trend.

“Rising rates dampened the ability of banks to finance themselves at low rates, and this was mirrored in a tightening of bank loan supply,” EIB concludes based on the poll’s outcome.

Banks expect a further tightening in the supply of credit during the next six months.

(Photo source: Elizaveta Elesina/Dreamstime.com)