RON loses ground as loan currency

The Romanian currency accounts for an increasingly low share in the volume of credits granted, down from 44% to 40% in the last year, according to data from the National Bank (NBR).
The volume of loans granted in the Romanian currency fell by five billion RON in a year’s time, to 80 billion RON in September this year, which means the value of new loans granted in RON did not cover the value of repayments.
The NBR notes in the release of the Board of Directors on Tuesday’s decision to keep its monetary policy interest rate at 8% that loans granted in RON underwent a significant decline.
“Loans granted to the private sector, especially those granted in the national currency, recorded a decline,” reads the release.
Foreign currency loans account for 60% of the overall non-government lending in September 2009, as opposed to 56% a year before. The volume of loans in foreign currency went up by over 10 billion RON in the past year, to 120 billion RON in September. However, analysts say a large part of the rise in the volume of foreign currency loans is “artificial”, being determined by the rise in the exchange rate by over 15% in the last year. The NBR reports all data in RON.
The increased share of loans granted in RON and, implicitly, the decline in that of foreign currency loans in the last 12 months is a trend characteristic both of individual clients and of corporate clients.
The share of loans granted to the population in RON was down from 42.6% in September last year to 39.5% in September this year. The share of loans granted in RON to companies fell from 45% to 40.7%.
High interests on RON-denominated loans, coupled with a decline in demand from clients froze new loans this year.
“The lending reboot has yet to occur because there is no demand from either companies or individuals, with a vicious circle created around lending and the resumption of economic growth,” analyst Aurelian Dochia says.