Stock of bank loans in Romania rises by 8% year-on-year at end-Feb

The stock of bank loans to non-government (private) customers in Romania increased by 8% year-on-year to RON 251.9 billion (EUR 53.1 billion) at the end of February 2019.

Romania’s GDP went up by 10%, in nominal terms, in 2018 compared to 2017 and is expected to rise by another 8% in 2019. Therefore, the volume of bank loans has been rising more or less in line with the nominal GDP.

The primary driver behind the rise in the stock of bank loans is the retail lending, where the stock of loans denominated in local currency (mainly mortgage and consumer loans) soared by 18.8% year-on-year, to reach 38% of the total stock of non-bank loans.

Notably, the 8% growth rate was given as an example by the ministry of Finance Eugen Teodorovici as a good benchmark for judging banks’ “greediness”. Namely, the banks increasing their financing above a certain rate (8%, for the current market conditions) would be waived half of the “greed tax” otherwise levied to all banks. The other half could be waived depending on the loan/deposit interest rate charged by each bank.

The bank loans denominated in local currency increased above average by 12.7% year-on-year to RON 165.5 billion (EUR 34.9 billion) end of February, while the loans denominated in foreign currency increased by only 0.01% year-on-year to RON 86.5 billion (EUR 18.2 billion).

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