Unemployment is the main threat to the retail credit portfoliosof banks, because the number of those to have lost their jobs ishigher among bankable clients than the official figure for theentire country, says Razvan Munteanu, Raiffeisen Bank retailvice-president.
"The problem of non-performing loans has to do with unemploymentfirst of all. The official unemployment rate is debatable, becausethe basis used to calculate it is not properly assessed. Thepercentage of those that lost their jobs among bankable clients ismuch higher."
In addition, Munteanu believes that the decline in incomescompounded by the increase in the monthly instalment especially forloans in foreign currency has contributed to the increase innon-performing loans. He says many companies have avoided explicitrestructuring steps by resorting to wage cuts instead, which hasaffected the customers' repayment capability.
"Apparently, the accumulation of non-performing loans is aboutto occur, but the restructuring of the public sector may create anew shock. Unemployment will remain the most significant indicator.If it stabilises at the end of the first quarter or the beginningof the second quarter of 2010, then positive trends willfollow."
Banking sources say Raiffeisen's share of loans rated asdoubtful and loss in the total portfolio stood at 9.13%, byRomanian accounting standards, below the system average of11.76%.
Munteanu believes that the increase in the maximum indebtednessof a client that the NBR's lending regulations allowed in 2007 hasalso contributed to the accumulation of non-performing loans, "butno one can say it is the root of this phenomenon".
The loans whose interest remains fixed for the first year onlyto go up significantly afterwards are not, as far as Munteanu isconcerned, among the main culprits for the increase in thenon-performing loans, either. "They were a purely commercialbenefit, because we evaluated our clients with the actual interestwe knew we would charge, not with the promotional interest, inmind. Anyway, such products account for very little in ourportfolio."
Unemployment fear has also made Raiffeisen check the stabilityof the employer more carefully when analysing the loan applicationof a client.
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