The average annual percentage rate for leu consumer loans in June jumped by 0.7%, to 15.8% per annum, after borrowing had become cheaper for three consecutive months, according to central bank (BNR) data. Euro secured loans also became harder to get, but the advance of interest rates in this case was less visible, of around 0.15%.
“I believe this all has to do with the rising uncertainty on the trend of financial markets. This reflects faster in consumer lending, which is more volatile than mortgage lending,” comments financial analyst Aurelian Dochia.
In spring, bankers launched a wave of consumer loan promotions onto the market, which did not spur clients to borrow more, so that new sales are still behind repayments. The amount of leu consumer loans hit 26.2 billion lei (EUR6.2 billion) in late June, down 20% from 2010.
However, consumer loan promotions have largely vanished from the market, with bankers currently betting on the sale of real estate loans and refinancing deals.
“There is a change of structure from last year. Banks have little appetite to sell consumer loans, as they are the ones that generated the biggest trouble and are registering the largest overdue payments,” states Dochia.
Banks quickly relinquished promotions also as interest rate cuts rapidly reflected in their revenue, with promotional interest rates having a visible negative impact over margins.
On the other hand, the interest reduction did not have the expected impact as banks did not succeed in generating very large volumes because of the low demand.
The average interest rate for new loans edged down by almost half a percentage point in June, to 10.1% per annum, with the downward movements being due to the cheaper funding for corporate clients.
The average interest rate for leu loans granted to companies went down to 9.3% per annum in mid-2011, as bankers see lower risks on this segment. “As companies improve their balance sheets, loan demand will also pick up. However, it all depends on economic developments domestically and internationally,” Dochia says. (EUR1=RON4.2356)
(English version by Catalina Apostoiu, Editing by Loredana Fratila-Cristescu)