ZF News

Banca Romaneasca: We are trying to get lending going

Banca Romaneasca, the local branch of the Greek financial group National Bank of Greece (NBG) is preparing to test the lending market again, after it had so far had restrictive client selection conditions this year. “In 2010 we want a controlled and prudent growth. On the retail loan segment, we will focus in particular on mortgage-backed loans, we are already in the process of revising lending conditions, which are quite restrictive at present,” says Crina Cosma, interim general manager of the bank. In the case of non-secured loans, the bank will go for shorter repayment periods and will require clients to declare the purpose of using the funds, dropping the personal loans model. “Lately the lending market has started to budge. There is, however, a more cautious approach on this segment, both from us and from our clients.” “We continue corporate lending, on segments less affected by the crisis and with future prospects, such as energy, utilities and production. Less so in the real estate sector,” says Cosma, who has over a decade’s experience in corporate banking.

Banks cut interests on deposit seven times faster than on loans

The spread between the average interest on loans in RON and the average interest on RON deposits went up by almost one percentage point in August compared with the previous month, to 6.44%, with bankers seeking to boost their revenues in order to be able to cover their rising provision costs. Compared with the end of last year, spreads are 2% higher, according to data of the NBR (National Bank of Romania). In August, the average interest rate on the population’s existing deposits fell by over 1%, to 10.84% a year, while the interest on similar credits fell by just 0.14%, to 17.23% a year, i.e. a seven times lower decline. Analysts say the high spreads now barely cover the banks’ expenses and they can by no means constitute a source of profit any more. “This margin covers the cost of risk, administrative expenses, minimum reserve requirements and banks’ profits. However, if we look at six-month results, the net profit is extremely small, with many banks recording negative profit,” says Ionut Dumitru, chief economist of Raiffeisen Bank.

‘We are working at 70% capacity” says head of Lapp Insulator

The management of Lapp Insulator in Turda, formerly Argillon Romania, a manufacturer of high and medium-voltage porcelain insulators, has revised its sales forecast downwards, from an initial 12 million euros to 9.5 million euros at present. “The financial crisis continues to affect our business, so we will not be able to achieve the turnover budgeted for this year. We have not made any people redundant, but we have not hired new staff, either. At present we are working at 70% capacity, we think as of next year we will be able to produce at maximum capacity. We are relying on the fact that there are positive signals on the European markets, which give us hope that the crisis will be over next year,” Sorin Nutiu, general manager of Lapp Insulator, told ZF Transilvania. The company posted an around 4.6 million-euro turnover in the first half of this year, down 12% on the similar time last year. In 2008 the company recorded a 12 million-euro turnover. Last year, over 95% of Romanian production was exported, with the leading markets being Western Europe and North America. According to Lapp Insulator representatives the Turda plant is of major importance in the group’s business, considering that the other plants cannot manufacture some of the insulators because they lack the necessary equipment.

Romgaz: Gas sales have started to rebound

Romgaz Medias says gas sales picked up in the third quarter of the year, specifying that this rebound has to do with many companies resuming their operations. “In the third quarter of 2009 there was a 2.4% rise in average monthly sales compared with those recorded in the first half of 2009,” say Romgaz representatives. However, in the first nine months of the year, the company’s sales were around 4.5% lower than in the similar period of last year, which did not leave financial results unaffected. Romgaz’s turnover amounted to 2.23 billion RON (529.1 million euros). 6.3% lower than in the first nine months of 2008. Gas and electricity consumption is regarded as an indicator of an economy’s health. In the first nine months of the year, when the economy strongly felt the impact of the crisis, gas consumption fell by 25-30%, whilst electricity consumption dropped by 10%. Romgaz is a state-held company that supplies half of Romania’s natural gas.