Consumer credit slowed down in October, after foreign currency lending, the main growth engine, was tempered by the enforcement of the NBR”s norms.
Consumer lending in foreign currency went up by a little more than 2% in October, the slowest growth rate since the beginning of 2004. The growth had reached 10.5% in September, after increasing nearly 9% in the previous months. On the other hand, lending in RON did not achieve anything more than a slight growth, going up by 7.3%, that is 1.5% more than in September. Lending in RON saw higher increases around the middle of this year (May, July and August), once the cost-cutting trend for RON loans became more obvious. Under the circumstances, consumer lending only increased by a little more than 5% in October, the lowest expansion since February.
Since the enforcement of the NBR norms, which cap the volume of foreign currency loans a bank may grant at three times the level of its own funds, the players in the banking system have taken steps to avoid this cap.
Several banks operated capital increases (including Raiffeisen, Bancpost, Alpha Bank and Volksbank), so as to allow them to resume lending in foreign currency. This way the effectiveness of the steps implemented by the central bank could be limited to no more than several months.
The volume of consumer credit exceeded 15bn RON (4.1bn euros) at the end of October. Ever since the beginning of the year, consumer lending has gone up by 92%, twice as high as the growth seen in the whole of 2004, given that most players in the banking system kept pressuring this market, which provides significant yields. Loans in RON totaled 9.5bn RON (2.6bn euros), nearly 63% of the total loans granted. Compared with the previous month, the share of the RON in the consumer lending structure went up by more than one percentage point. On the other hand, the share of the domestic currency fell 11% over the last 12 months. Consumer lending is one of the few segments where the RON prevails.