Romanian Household Lending Likely To Recover In Q3 – Survey

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The survey showed bankers estimate household lending demand, which saw a steeper decline especially in the consumer loans, will increase in the third quarter. Also, banks harshened the lending conditions in the second quarter, following the increase of overdue loans, the expected decrease of income and higher unemployment.

„The appetite for consumption has been adjusting, following the evolution and perspectives on the labor market. Structurally, the credit card demand was less affected compared to the other types of consumer loans. For the coming quarter (the third – e.n.), the banks estimate the demand will reenter a positive path,” the survey noted.

As to mortgage loans, the bankers predicted the demand will see an improvement in the following months, also fueled by the launch of government program „First Home.”

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„The mortgage loan demand declined further in the second quarter, in line with bankers’ estimations. However, the decline was less ample this time, as it affected only one quarter of the banks. The decrease in demand was due to the evolution and perspectives on the real estate market (which saw substantial price corrections since the end of 2008), the population’s expectations regarding the financial situation and the unemployment rate for the next 12 months (…), as well as due to limiting loan offers,” the survey showed.

In the corporate sector, the banks have imposed harsher lending terms in the second quarter, but the general trend showed a slight improvement.

„The bankers estimate a similar evolution for the next three months as well. Structurally, the small- and medium-sized companies are still most affected by the tougher lending standards, regardless of the loan maturity. The large companies are in a better situation,” the survey said.

It said corporate loan demand decreased for over 40% of the banks in the second quarter, due largely to the economic downturn and the harsher lending terms.

Romanian bankers believe lending risks have increased for all economic sectors, excepting energy, with property and constructions taking the hardest hits. Lending in retail, tourism, finance, transport and communications also posted bigger risks in the second quarter, the survey showed.

The survey is made four times a year by the central bank, based on responses from ten banks that total around 80% of the private lending on the Romanian market.