Rasvan Radu: Longer maturities, bigger risks

The extension of the maturity of loans for individuals was a disguised way of increasing the degree of indebtedness, under pressure from the norms of the NBR (National Bank of Romania), ultimately leading to an increase in risks, believes Rasvan Radu, chief executive of UniCredit Romania. “The cost of risk is rising in the entire banking sector and we are also seeing a rise in the degree of indebtedness. Although the degree of indebtedness was limited by the NBR norms, the growth was disguised through the extension of maturities. This is a perverse effect of these norms, and much riskier,” says Radu. The total cost of risk of the two local entities of the UniCredit group – HVB Tiriac Bank and UniCredit Romania, decreased slightly last year, from 1% to 0.8%. The cost of risk is calculated by the ratio of net credit provisions against the total volume of credits. The BRD, the second largest bank on the market, also saw the cost of risk decreased last year from 0.74% to 0.66%.