“Lending could be hurt by rising consumer pessimism and more expensive resources raised by banks, meaning higher interest rates for loans. On the short term, the impact of the two factors on Romanian lending is, however, limited,” believes Dan Bucsa, chief-economist with UniCredit Tiriac Bank.
Private lending is rising, while governmental lending is still falling. Government lending slid to 64.2 billion lei (around EUR15 billion) in late July, down almost 5% month-on-month.
However, analysts say the state could spur private lending by speeding up infrastructure investments, with a direct impact over economic growth.
“Stepped-up infrastructure projects, the launch of public-private partnerships, improved EU fund absorption may lead to rising lending needs and implicitly bolster economic growth,” believes Melania Hancila, chief-economist with Volksbank.
Overall, companies are still the ones that could absorb more money from lending, competing with the state, which has become a major banking client.
“In the economic cycle strengthening phase, a better trend of lending to companies is normal. Consumer lending cannot pick up in the absence of wage raises, which would allow for the current high indebtedness degree to fall and for improved outlooks for consumers in general,” says Nicolae Chideschiuc, chief-economist with ING Bank.
In parallel with the positive trend of lending, individuals’ and companies’ savings with banks also rose further in July, going beyond RON177 billion (around EUR42 billion) for the first time in the last seven months. The volume of deposits rose by 1.7% from June and by 5.5% from a year ago.
“The upward trend of savings is mainly due to the need for safety amid this highly insecure period, as well as to delayed investments,” says Hancila.
The structure of deposits shows Romanians have more confidence in the national currency. Thus, leu-denominated savings increased by 11% from last year, to RON116.4 billion, while foreign currency ones dropped by 3.7% to the equivalent of EUR14 billion.
“The rising savings are due to confidence in leu on the one hand and in the banking system on the other, which is good,” believes Florian Libocor. (EUR1=RON4.2579)
(English version by Catalina Apostoiu; Editing by Loredana Fratila-Cristescu)