Credits up, deposits very slow to progress

Banks maintained the high growth pace of the lending for individuals and private companies in July, as well, though not as high as throughout March-May. The lending progress, however, maintained amid alarming signals about the repayment capacity of the clients, and also amid an unparalleled discouragement of the population’s savings.

Seven months through this year, the private lending volume granted by banks had increased 20.5% in real terms. Non-governmental lending in July even sped up a bit from June, going up 3.2%.

The lending in ROL gained only 4.8%, compared with 7-9% in the previous months. On the other hand, the appetite for foreign currency loans resurfaced, so that if calculated in euros, such loans went up by no less than 3.4%. Given that the euro lost 1.35% against the ROL in July, the growth of the foreign currency loans expressed in ROL was of only 2%.

Prior to the signal sent out by the National Bank of Romania (NBR) early in August in order to get banks to rise interests on deposits, the people’s savings had kept still even in nominal terms, following the decline in May.

Savings in July went up only 0.04%, which did not allow for even as little as attaining the April peak, when savings in banks amounted to 94.1 thousand billion. Foreign lines of credit, which largely sustain the granting of the loans, made banks not that sensitive about the savings decline.

It was not until the second half of August and early September that the banks decided to slightly up interests on deposits.

The individuals and the companies did not approach savings the same way. Whereas the ROL amounts deposited by individuals with banks kept going down in real terms, the companies deposited 0.6% more ROL with banks than they had done the previous month in real terms, while the nominal increase was of 1.8%. The appreciation of the national currency also made the placements in foreign currency expressed in ROL fall slightly. If talking in absolute terms, however, the population kept being more confident in the foreign currency deposits, which progressed 1.4% to 2.02bn euros.

Companies preferred the national currency, as their foreign currency deposits expressed in euros increased only 1% to 1.82bn euros. The late July statistics show the disparity between Finance Ministry’s policy of borrowing from the domestic market and the price the market is asking.

Government securities held by the non-banking sector had gone down 6.4% by the end of July compared with late June, reaching 40,651bn ROL. The government securities issued in foreign currency accounted for $33.6 million of this amount, down 68.4% from the previous month.

Monetary mass in July fell 0.6%. Albeit foreign net assets rose 12% to 251,291bn ROL due to the 14.6% growth in the “convertible currency” component, the monetary mass was negatively influenced by the 15% decline in domestic net assets.