Overdue loans accumulated by individual customers totalled 221 million RON (69 million euros) at the end of May, double the value registered at the same time last year, according to data centralised by the NBR.
The increase in the volume of overdue loans accelerated in the first five months of this year reaching 54%, compared with a 12% increase between January and May 2006.
The amount of overdue loans has increased amid an a decline in the interest rate on new loans in RON by 1.85% over the past year, while the interest rate on new loans in euros fell by almost one percent over the same period.
According to the NBR data, even the average interest rate on already existing loans in euros fell by 0.93% between May 2006 and May 2007, despite the gradual rising trend of the euro reference rate on the international markets.
Statistics from the central bank even indicate interest declines for older mortgage loans, although most banks charge rates that are periodically adjusted in line with international reference rates, which has always had the knock-on effect of making credits more expensive.
However, this effect has largely been offset by the nominal appreciation of the RON, which is close to 8% against the beginning of the year. This means the increase in overdue loans cannot be blamed on the increase in the euro reference rate. In addition, even existing loans in RON witnessed fluctuations in their respective interest rates, depending on the conditions on the monetary market, also acknowledging the fact that banks take reference rates into account.
Still, even so, data published by the BNR reveals a substantial decline in the cost of existing loans, from an average interest rate of 16.75% in May 2006 to 14.74% in May 2007, which is by two percent.
One thing is certain however; that the credit risk rate across the banking system calculated as a ratio of the loans reported by banks as doubtful and losses and the total loans and interests of banks, has gradually risen over the past year from 2.61% in December 2005 to 3.19% in May 2007, that is by more than 0.5%.
Meanwhile the share of overdue and doubtful loans in banks' total assets remained at 0.16% in May, after peaking at 0.19% in May 2006.
The increase in the lending risk, however, shows in the increase registered in the reserves made by banks, with NBR data indicating that they actually tripled from December 2005 until May 2007, from 698 million RON to 1.87 billion RON (about 584 million euros).
This May brought stagnation in banks' net assets to almost 184 billion RON (55.7 billion euros) against April, which may be partly due to the fact that many retail customers postponed taking out a loan, preferring to wait for the new more lenient lending norms to be implemented.
The assets of the banking sector witnessed an increase by 6.4% in the first half of the year compared with the end of last year and by almost 32% compared with the same time last year.
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