Many banks, few credits

The 31 Romanian commercial banks and eight foreign bank branches did not manage to bring the financial brokerage level in Romania (the non-governmental lending share in the GDP) to more than 13% of the Gross Domestic Product last year.
The volume of credits granted by banks to companies and individuals increased 28.9% in real terms last year, yet its share in the GDP remained the lowest in the Central and Eastern Europe, because the relatively high increase was due to the very low lending level in 2001. Three years ago, non-governmental lending accounted for only 8%-9% of GDP.
Financial brokerage accounts for nearly 45% of GDP in the Czech Republic and for 35% of GDP in Hungary.
“The banking brokerage ratio should reach 20%-25% of GDP by 2006-2007 so that we could say it has improved. There’s only one obstacle to overcome: distrust,” National Bank of Romania (NBR) governor Mugur Isarescu says.
He explains that even though the banking system has been purged in the meantime, it still remains far from what it is supposed to be and what the economy needs.
The financial brokerage level looks somewhat better if taking the share of the total banking assets in the GDP into account. The assets in the Romanian banking system were worth 8% more in 2002, reaching 13.4bn euros, according to the NBR data. Therefore the weight of the total assets in the GDP went up to 32%-33% compared with circa 28% in 2000.
The National Bank welcomes a constant increase in lending, provided that prudence should be observed.
Lending in ROL went up 19.2% in real terms last year, which is only half the 50.6% growth of the lending in foreign currency. Making financing affordable for more and more companies, as well as developing the financial sector so as to make it efficiently channel the savings attracted to investments are important subcriteria for meeting the EU accession economic criteria.
Albeit more and more banks are seeing increasing demand for loans, the lending channel is still narrow.