Consumer lending in May saw the highest rate of growth for the last eighteen months, rising to a total of 105,139bn ROL (2.9bn euros), National Bank data show.
In percentage terms, the rate of growth last month was close to 14%, more than double the growth in April. Growth in consumer lending has been steadily picking up speed since the beginning of year, with consumer credit already increasing by 2% in January and the trend becoming clear by March.
On the other hand, ROL-denominated loans also grew strongly, almost matching the growth in foreign currency loans: loans in ROL rose by more than 12% in May, while foreign currency loans rose by 14.3%.
"Growth has been excessive since the first quarter, when consumption increased faster than GDP. We should expect the share of consumption to be higher by mid-year. In theory, steps should be taken to contain consumption, though this development is no longer a surprise as the same thing happened last year. On the other hand, the perverse effects of limiting consumption will lead to a limiting of economic growth, which is mainly driven by consumption,?" says Liviu Voinea of the Applied Economics Group.
He believes the initial steps to contain consumption were taken too late, which is now showing.
Compared with May 2004, consumer credit volumes have risen by 77%, with foreign currency loans playing the most important role in this, having posted an annual growth of 320%. This growth pace was also influenced by the comparison base, which was very small last year. Still, the expansion of foreign currency lending was also higher in absolute terms. By contrast, loans in ROL grew by only 35% over the same period. The shift in borrowers'' preferences to the ROL occurred amid heavy reductions in interest rates for ROL loans, which fell towards 15% per annum.
Loans in ROL were worth a total of 68,325bn ROL (1.9bn euros) by the end of May, 65% of the total.
With the central bank intervention to dampen the ROL appreciation against the main foreign currencies, the attractiveness of foreign currency lending diminished. Bankers are warning that foreign currency loans also carry the risk of foreign exchange rates, which would make repayment more difficult in case of a depreciation of the ROL.
In absolute terms, the growth in May was worth 12.6 thousand billion ROL (348 million euros), more than double the increase in March and almost nine times the increase in January.
This rapid expansion comes at a time when International Monetary Fund (IMF) experts have been formulating objections to the overly fast growth of consumption fuelled by lending. At the end of last week, Romania''s finance minister said the lending rules for population would be tightened further following the introduction of a new ceiling for debt servicing for all the contracted loans. This step was included in the supplementary letter of intent agreed upon with the IMF. NBR rules currently stipulate monthly loan repayments should not be worth more than a maximum of 30% of the income of each borrower.
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
