The amounts overdue in loan instalments from both individuals and companies came close to one billion euros in February, after having tripled over the past year, NBR data show.
Romanians have been dealt a heavy blow twice in the last few months, when the rapid exchange rate increase overlapped the interest rate raises. Worse even is that some of those who took out loans might lose their jobs this year.
Whereas the quality of loan portfolio used to be very good in the past years, despite the fact that bankers sought to grant as many loans as possible and as fast as possible, in the second half of 2008, the situation started to deteriorate rapidly. The skyrocketing amount of past due loans over the last few months shows a banking system that will have to cope with a fast rise in non-performing loans this year. Some of the banks even saw their profits plunge or posted losses in the last quarter of 2008, as a result of the high expenses made to cover the anticipated risks.
"The tripling of the past due loan volume is one more argument that supports the idea that Romania is going through the financial crisis, too. On the other hand, if we look at this volume as a percentage of the Gross Domestic Product, we can see an increase from 0.3% to 0.9%. The less than 1% of GDP shows that the banking system in Romania has managed lending very cautiously in the current context," says Florian Libocor, BRD-SocGen's chief economist.
The abrupt rise in RON/EUR exchange rate is starting to show its impact on the quality of foreign currency loan portfolios. The volume of past due loans in foreign currency rose by 75% to 426 million euros in just two months, January and February. The exchange rate went up by 8% in January, to 4.23 RON/EUR from 3.91 RON/EUR in December. The depreciation of the RON continued in February, though at a slower pace, with the euro averaging 4.28 RON.
NBR warned in February that the too fast depreciation of the RON could jeopardise the stability of the economy, which is why it did everything in its power to prevent the euro from going over 4.3 RON.
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