“The results registered mid-2014, impacted by the lack of investments and large development/infrastructure projects, pointed to a full-year market contraction of up to 10%. However, the market has recovered significantly over the last six months, reaching the level in 2013 and confirming a stabilization,” Bogdan Rosu, head of the Romanian factoring association ARF, said in a statement.
He also said the recovery was mainly due to an increase in consumption in the second half of 2014, as well as to a positive evolution of the industrial output.
Rosu pointed out that last year’s results are “pleasing,” considering that the market contracted nearly 6% in 2013, reflecting the evolution of the Romanian economy.
The construction sector remained the sector that accessed the bulk of internal factoring operations, accounting for 23.82%, down from 32.8% in 2013, confirming the low level of investments and projects carried out in 2014, according to central bank data. The pharmaceuticals sector made up only 2.5% of total internal factoring operations.
Other increases were registered in the sector of metals, chemicals and recycling, whose share rose from 4.72% in 2013 to 8.72% last year, and in the transport sector which reached 7.58%, from 6.2%.
The auto market, which reported significant increases in 2014, in terms of both exports and imports, reflected this trend in the share held in total import factoring operations, of 27.58%, and export factoring operations, of 11.98%.
The Romanian factoring association was founded in April 2011 by ten banks and non-banking financial institutions, and its goal is to promote factoring as a complete financial instrument.
Factoring services consist in selling account receivables (non-cashed invoices) accumulated by a company to another entity, mainly a bank subsidiary, at a certain discount. This entity starts procedures to recover owed sums and obtains profit whenever it manages to raise an amount larger than the price it paid for account receivables.