The rate of non-governmental lending growth has visibly slowed in the first seven months of the year compared with the corresponding period of 2003: 15.4% from 20.7% in real terms since the previous December. The banking system's total credit portfolio stood at 8.9bn euros at the end of July.
The substantial slowdown is particularly true for loans to individual customers, down from 19.2% in May 2003 and 18.1% in June 2003, to 3.8% in May 2004 and 4.2% in June 2004.
The growth rate for corporate lending did not slow down as much, but instead, saw sharper fluctuations from one month to another.
"The growth rate of lending is visibly slower this year, with estimates pointing to growth of 27.8% in real terms by the end of the year, against the 48.5% in 2003 - which means it would be sustainable," vice-governor of the National Bank of Romania (NBR) Mihai Bogza told Ziarul Financiar.
He says the slowdown came at a time of market saturation given the current purchasing power, but was also prompted by steps taken by the NBR. Bogza estimates that non-governmental lending will exceed 10bn euros by yearend, "despite all restrictive measures", which would push the level of financial intermediation to 20% of GDP, still way below the levels in the countries that recently joined the EU.
After a certain stagnation of non-governmental lending in April and May (1.9% and 1.8% respectively), the first two summer months led to a visible acceleration, resulting in growth rates of 2.7% and 3.2% in June and July respectively.
The bad news regarding this acceleration is that its underlying explanation was another jump in foreign currency lending, given that ROL interest rates were in no rush to go down.
Thus, if considering the total non-governmental credit growth of 42% in real terms between July 2003 and July 2004, loans in ROL progressed by 32.6%, while lending in dollars and euros rose by no less than 51.3%. Subsequently, the lending in ROL/lending in foreign currency ratio deteriorated once more, with the domestic currency accounting for 40.4% out of total lending, bringing with it all the risks this duality of lending in the Romanian economy involves.
"The growth in foreign currency lending is the negative corollary of the lending development this year. It had to be counteracted, so we decided for an increase in the minimal mandatory reserves," Bogza explained.
razvan.voican@zf.ro
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