The population's exposure to the banking system has exceeded the amounts placed in banks for the first time, after three years of fast-paced lending growth. Whereas loans taken by individual clients were still smaller than the amount of savings in banks in mid June, they had already exceeded deposits by more than one billion RON at the end of August.
According to NBR data, loans taken out by individual clients amounted to 34 billion RON (9.6 billion euros), while deposits totalled only 31.9 billion RON (9 billion euros).
Under the circumstances, the population is no longer in the position of net lender of the banking system, which used to be a comforting situation even in the event of certain developments that would have reduced the customers' repayment capability.
In August last year, savings people had deposited in banks exceeded loans by 8 billion RON (2.3 billion euros), at a volume of almost 26 billion RON. Meanwhile, loans taken out by the population have doubled, going up from 17.6 billion to 34 billion RON, mainly driven by the expansion of consumer finance.
Also this August, the population's borrowing in foreign currency exceeded the deposits in foreign currency, at a volume of more than 13 billion RON (3.7 billion euros).
This happened after foreign currency lending kept growing faster and faster last year, while deposits were really slow to increase, a trend boosted the by the rapid appreciation of the RON.
"The trend was obvious considering lending to the population increased by about 80% in real terms, in 12 months, while savings only increased by 15%," comments Mihai Bogza, Bancpost chairman.
An explanation? "Rich people don't keep their money in Romania in order to avoid taxes, or because private banking services are not developed, or even due to a lack of confidence," Bogza says.
This development is making the foreign currency risk to which the system is subjected even worse, as many clients would have trouble repaying their loans in foreign currency in case of a significant depreciation of the RON.
The good news is that foreign currency deposits have picked up lately, to an annual growth of 34% in August. The pace is still slower than that of lending, which despite having slowed down, is still increasing by nearly 50% a year.
As far as companies are concerned, their loan volume, worth over 48 billion RON, considerably exceeds the deposit volume, which totals a little more than 37 billion RON.
The situation is different for every bank. The population's deposits/loans ratio at Raiffeisen, for instance, still maintains above 1.
The fast-paced expansion of lending was helped by the funding raised from foreign markets, especially by those banks held by international groups, which can therefore get cheap loans.
International institutions like the EBRD and IFC in turn contributed cheap funding, making it accessible to banks not backed by foreign shareholders.
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