Chart of the week: Romania’s lending to households at a standstill in Q1

The volume of new loans extended by Romanian banks to households remained at the same level in January-March this year compared to the same period last year: RON 7.6 billion, or EUR 1.6 billion. The stock of loans advanced by 1.4% year-to-date (or by 8.1% year-on-year) at the end of March, but this was still insufficient for offsetting the 2.1% headline inflation. The stock of loans thus contracted in real terms through the quarter.

The standstill came after a hectic credit market toward the end of last year, possibly as an effect of the emergency ordinance (OUG) 114/2018 that created panic among banks and high (partly false) expectations among debtors. The volume of new loans extended in the last quarter of 2018 advanced by a robust 20.8% year-on-year rate while the average growth rate was 12.6% in 2018.