Since 2012, the volume of funding released for agriculture, a sector that became an important pillar for the unexpected high economic growth of last year, hovered around RON 11 billion.
However, agriculture posted the biggest increase of weight in total banking exposure during the crisis, while the field of constructions, a true star until 2008-2009, dropped from 12% in 2009 to 10.6% in March 2014.
The segment of individuals still rakes in almost one third of banking funding, with a slight upward trend in the past year despite the falling appetite for new loans and of a still high level of indebtedness.
This is followed by services with a weight of 26.4% in March, a two percentage point decline against 2008, and by industry, with a weight of below 20%, with no major fluctuations during the crisis.
Prejudice regarding the high volatility of farming output generated by significant vulnerability to climatic conditions persists and so does the deep-rooted cliché of fragmented farming areas, despite the concentration move registered in recent years inclusively amid purchases by foreign investors.
However, technology investments operated in recent years in this field cannot be ignored, as they have supported output growth and allowed for a dwindling dependence on weather conditions. At the same time, the state boosted support for the farming sector through several instruments.
Beyond the specific assessment of risk associated with the field, some banks are at any rate oriented toward deleveraging. Others are still under the pressure generated by the waves of insolvencies in industry and services. An encouraging fact, however, is that the top ten banks on the market are signaling, at the level of 2Q, a reduction in the risk associated with agriculture, according to a BNR survey.
In the case of BCR, the largest bank by assets, exposures to agriculture and forestry industry weighed 2.7% in the total portfolio, down from 3.6% in 2012 in the context where the bank’s entire exposure plunged by over RON6 billion. The volume of exposures to this sector dropped by 33% in 2013, to RON1.25 billion.
Agriculture does not hold a better position in the structure of exposures in the case of BRD, either: 2.2% at the end of 2013, but up from 2% in 2012. The volume of exposures revolved around RON1.2 billion at the end of 2013, from RON1.15 in 2012.
In the case of Banca Transilvania, the third largest lending institution by assets, agriculture at the end of 2013 weighed 4.3% in total exposures, slightly down from 4.5% in 2012. However, the amount of loans rose by almost 20% in 2013, to RON874 million, accounting for 4.6% in the total portfolio.
The bank has a department specialized in agriculture and plans to increase placements in the field.
At UniCredit Tiriac Bank, the fourth largest bank by assets in 2013, the field weight 3.2% in total exposures at the end of 2013, flat from 2012, though the volume of funding released for this sector dropped by 1.7% in the past year, to some RON502 million. The bank has a rising interest in the agricultural field.
In recent years, state-owned bank CEC Bank has embraced an ambitious strategy of boosting funding for agriculture. At the end of last year, 18% of the loans granted by CEC to legal persons were aimed at agriculture, namely RON1.5 billion. The bank in 2013 granted 20,270 new loans for agriculture, worth RON771 million, accounting for over 28% in new loan output.
Raiffeisen expanded the portfolio of SME lending products with solutions specific for agriculture. As a result, exposure to this field widened in 2013 by over 9% to around RON781 million. However, weight in total exposures stood at just 2.6%, close to the 2012 level.
(English version by Catalina Apostoiu)