The decline in loan stock on the year-ago period stood at 0.7% in July, which means a significant deterioration compared with the previous months, according to Romania’s central bank data.
New loan sales had picked up in the first half and lenders say there was significant activity in July, too. Still, loan sales are slower in July and August because of the vacation period. The total volume was most likely affected by the non-performing loan portfolio cleanup.
Local banks had 213 billion lei (EUR48 billion) loans at the end of July, down about RON2 billion on the previous month.
“July was a good month in terms of sales. We saw an increase in loans brokered compared with June and the same month of 2014,” says Gabriel Cretu, managing partner of consultant and loan broker Adwisers.
“I did not see any increase in bankers’ reluctance to grant loans. Banks probably stopped NPL cleanup process in June to make half-year financials look good and restarted it in July.”
The decline in loan volume in July was solely due to the foreign currency lending, which dropped 3% on the previous month and 11% on July 2014. The loan stock reached RON109 billion equivalent (less than EUR25 billion) in July.
Romania’s central bank put foreign currency lending restrictions in place so sales are really slow and on top of that many borrowers who took out foreign currency loans in the past defaulted on them, forcing lenders to write those loans off now.
(English version by Loredana Fratila-Cristescu)