Almost 8% of loans sold to individual customers were non-performing on average in mid-2011.
“An inverse relationship between the age of debtors and the rate of bad loans can be noticed; the relationship is relatively stable over time. Thus, debtors’ age could make a variable that could be used to a higher extent in assessing eligibility in contracting an unsecured consumer loan,” central bank specialists write in the latest financial stability report published by the institution.
Clients aged above 65 are at the opposite end, with the rate of bad loans sliding to 3%. The weight of bad loans goes gradually down from 12-13% in the case of clients aged between 25 and 35 and reaches 5-6% in the case of clients aged between 45 and 55.
In the case of home equity loans, the bad loan rate-age inverse relationship disappears and there is a tighter relationship between bad loans and unemployment.
Banks’ loan portfolios have deteriorated significantly over the past two years amid the falling incomes and rising unemployment, with the rate of bad loans climbing to 7.9% in mid-2011.
Bankers have tried to ease pressure over portfolios by externalizing bad loans or restructuring soured assets. BNR specialists note, however, that loan restructuring efficiency was reduced amid the unfavorable economic conditions, so that these moves could put additional pressure on banks’ portfolios in the future.
However, had they not been restructured, loans with payment delays of over 90 days in September 2010 would have contributed to the around 0.9% increase in the bad loan rate, BNR report also reads.
(English version by Catalina Apostoiu)