Will retail lending market rebound this autumn? Not really, bankers say

The first month of autumn saw the banks somewhat busier promoting retail loans, but bankers say that the market is still far from the ebullience of the past years.

What is hindering lending? On the one hand, clients are still reluctant to take loans, as they were this spring, but bankers in turn say that they are much more careful and even avoid the word "relaxation".

"We've been talking about the fresh start on the retail lending market since February or March. Demand is much lower than it used to be. The number of loan applications is increasing, though more slowly than last year," says Sorin Mititelu, director of business and retail product development with BCR, the biggest bank in the system.

With interests of 7% to 9% on mortgage loans in euros and of over 20% for consumer financing in RON, banks clearly show that they are seeing a much higher risk in granting retail loans, which lowers the number of clients actually qualifying for a loan.

Still, there have been signs of rising interest among banks in granting loans over the last two weeks. Millennium Bank started a campaign to promote mortgage loans, which echoes a similar campaign conducted by CEC Bank. The Turks at Garanti Bank have their own promotional offer, giving clients that take a loan until the end of the month the option to choose three months when they do not have to pay their instalments. The Greeks at Piraeus have cut the interests of the Happy End personal loans by up to 2.75%, but even so, the interest rate in the first part of the contract is still over 20% per annum. At the same time, the Italians at UniCredit are promoting consumer loans, which are sold through a newly set up consumer finance division.

"Every bank wants lending to rebound. Everyone wants to grant loans, just not do so under any circumstances, we cannot go back to the relaxation we had a year and a half ago," comments Gabriel Cretu, sales manager of OTP Bank, a medium-sized player.

If they do not sell loans, banks do not collect (application review and granting) fees, which used to be an important revenue stream. In addition, after having fought to attract deposits in the first half, banks are now seeing they have no option to invest their cash in.