After two years of decline on a monthly basis, consumer loans increased in March compared with February. March was also the best month for mortgage lending in lei ever, witnessing a 420 million lei (EUR94 million) increase or about 2,500 loans sold.
Banks had a leu-denominated mortgage loan portfolio of RON4.5 billion at the end of March, double the level of last summer and three times the volume registered two years ago.
The more visible economic growth of last year, in addition to what analysts expect to be the growth of the first quarter, more than 3% to 4% is starting to show in consumer spending, from clothing, food, cars, homes to bank loans. The sudden onset of the crisis in 2008 dealt a heavy blow to these markets, which are still reeling from it five years down the line.
“The leu lending increase in March came after two months of growth albeit fragile. Even consumer lending increased for the first time in twenty months,” said Florentina Cozmanca, senior economist of RBS.
Banks had RON23.1 billion consumer loans in their portfolios at the end of March, an increase of RON100 million equivalent compared with the end of February. Consumer loans had been going down since July 2012. Under the circumstances, the consumer loan volume is still RON700 million lower than in the year-ago month.
The leu loans for consumers and companies rose by more than 2% in March to RON81 billion. It is the first time since 2010 when private lending returns to more than 40% of the total loans granted by banks.
The decisive factors in this growth of leu lending in the past few months were the shift of the First Home program to lei exclusively last summer, and the monetary policy relaxation cycle conducted by Romania’s central bank in July 2013-March 2014. Leu interest rates are now close to those of euro loans so debtors no longer have any reason to take on the risks of a loan in foreign currency. (EUR1=RON4.4503)
(English version by Loredana Fratila-Cristescu)