The total volume of bank loans contracted by non-government entities increased by 7.2% year-on-year to RON 268 billion (EUR 55.8 billion), representing 25% of GDP, the end of November 2019. In real terms, the total lending increased by 3.3% year-on-year.

The growth rates are consistent with a slight shift toward lower credit-to-GDP values (financial intermediation), even given the decline in GDP growth rates.

The industrial slowdown and possibly more cautious consumer confidence are the main drivers.

At the same time, rising household incomes have kept pushing up bank deposits (RON 357 bln, +9.9% year-on-year as of the end of November) resulting in larger amounts of financial resources in local banks’ vaults.

This explains the rather low cost of public financing seen in the latest auctions on the local market.

The annual advance rate of the bank credit eased from 7.5% year-on-year at the end of October and 7.7% year-on-year at the end of September.

The growth, as of November, was supported by the loans expressed in local currency (RON 180 billion, 67.2% of total), which advanced by 9.7% year-on-year compared to the 2.4% annual increase of the loans expressed in foreign currency (mainly contracted by firms).

Speaking of the loans denominated in local currency, RON 108 bln were extended to households (+13.7% year-on-year) and RON 72 bln (+4.1% year-on-year) to companies.

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editor@romania-insider.com