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Financing growing scarce, brake on credit, biting into banks' profits

Although Romanian bankers are expected to reap substantial profits this year too, forecasts for 2009 are far less optimistic given the fact that the brake on lending and the shrinking of financing from parent banks will put extra pressure on profits.

Analysts consider that the basic effect of the sped up growth in retail lending, the enforcement of BNR's more restrictive regulation and the striking off - by several banks - of credits in French francs will slow down the advance of lending from more than 60 pct to 30 - 40 pct at the end of the year.

The annual growth pace of the non-governmental credit tempered down considerably during the summer (sliding from 63.4 pct in June to 50.5 pct in September and the three-quarter aggregate figure for corporate and retail loans was 52 bln euros.

Analysts expect lending to advance by 20-30 pct in 2009; central bank governor Mugur Isarescu too said that the growth pace of lending will temper down to around 25-30 pct a year from 50-60 pct in the past months.

The borrowers who raised foreign currency credits in August 2007, under quite lax terms, are paying in October 2008 installments by even 25 pct higher, on the background of the local leu's depreciation and rising interest rates; the outlooks are negative, at a time when banks supplement their costs.

Interest rates charged in August by non-financial companies for previously engaged loans in local lei were by 3.12 pct higher than a year before, whereas freshly engaged corporate loans were available for interest rates 4.65 pct higher.

Despite rumors about the shaky foundations of some Romanian credit institutions, the international financial crisis will not affect the stability of the Romanian financial-banking system, notes daily Business Standard, that admits however that 'some liquidity issues might still arise in certain cases.'

The local depositors kept their ears open to rumors too, but on the other hand, Romania, like several other EU member states, put up the deposit guarantee cap from 20,000 euros to 50,000 euros. In Romania, 99.2 pct of the deposits stand below the 20,000 euro-cap, but by their aggregate amount, the rest of 0.8 pct deposits account for 40 pct of the total savings.

BNR was receptive to the needs of particular banks and reduced for the first time in the last three years the mandatory reserve requirement on credit institutions' liabilities in lei from 20 to 18 pct, implicitly injecting two billion lei in the system; this measure is aimed at improving liquidity management on the interbank monetary market, reads the cited paper.

Foreign resources attracted by the local banks total 22.8 bln euros, 90 pct of which - specifically more than 20 bln euros - in financing lines from parent banks. Romania's forex reserve is 27.3 bln euros.

 

Sursa: http://www.rompress.ro

Tags: banks euros financing lending profits credit bnr euro

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