According to the latest central bank data, private lending grew 7.7% in annual terms in September, compared with annual growth of 8% in August,to RON266 billion, as local currency lending grew 9.7% and foreign currency lending grew 3.9%.
Private lending had started 2019 with a surprising growth of 8.4%, as debt ratios were capped and following the introduction of a tax on bank assets, then slowed to 8% at the end of February.
The slight deceleration in September had been mainly ascribable to loans to non-financial corporations, whereas the rate of change of household credit had advanced marginally, amid the further strong, double-digit increase in domestic currency loans, according to the minute.
In September, the average lending rate on new business had witnessed only a small correction of the large decreases seen in the previous months – considerably attributable to the pick-up in the volume of secured loans to the agricultural sector –, so that its quarterly average had dropped significantly versus the first two quarters of the year, even amid a sizeable rise in the IRCC, carrying the potential to enhance the uncertainties generated by that benchmark index from the perspective of the monetary policy transmission and conduct.
Board members noted that the recent evolution of the EUR/RON exchange rate had somewhat decoupled from that of the exchange rates of the other currencies in the region, which, in the context of an improvement in global risk appetite, as well as of some domestic influences, had witnessed notable declines in October, recovering entirely or to a large extent the increases seen in Q3.
Some board members drew attention to the risk of a potential sudden change in the global financial market sentiment, implying significant capital movements that could seriously affect the domestic financial environment, calling on the central bank, especially in the context of the twin deficits, to be alert and prepared for a potential necessary prompt reaction.