NBR has "mixed feelings" about non-govt. lending

The National Bank of Romania (NBR) has “mixed feelings” about the recent evolution of non-government lending. On the one hand, NBR is concerned about the rather unfavourable impact an unsustainable lending growth might have upon the trade balance, but, on the other, it feels this growth “is extremely beneficial to the Romanian economy in the long-term.”

“We are both glad and concerned about the potential effects that an exceedingly fast growth of this indicator may have on the evolution of the main macroeconomic indicators. Romania has one of the lowest levels of banking intermediation in the area, we are quickly closing this gap, the lending market growth entails the development of other segments – the insurance market for instance, and, also, several significant investors (and by that I mean renowned financial groups) have decided to increase their exposure in the Romanian banking system – these are just some of the positive issues. However, it is true there are also negative sides: the negative impact upon the trade balance, inflationist pressure, the payment default risk entailed by the potentially significant fluctuations of the exchange rate,” NBR vice-governor Mihai Bogza told Ziarul Financiar.

According to Bogza, the central bank has considered a 20% annual growth of non-government lending for the next 3-4 years, which will have a positive impact in the long-term.

In the first eight months of the year, non-government lending went up 28.3% in real terms.

Shrinking rates and fiercer competition among banks, mainly in the field of services for the population, have boosted lending, which exceeded all expectations in the past year, as it had gone up 43.7% in real terms at the end of August, as compared to the year-ago period.

According to NBR data, non-government lending was worth 247,485 billion ROL at the end of August, up from the 150,833 billion ROL posted in the year-ago period. oana.nuta@zf.ro