Romanians borrowing by 2.3 bln euros higher than savings

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The bank loans contracted by the Romanians exceeded in July the deposits they set by 2.3 billion euros, as a result of the accelerated increase in borrowing, show figures supplied by the National Bank of Romania. The amount is by 110% higher than in last July.
 
The statistics by currencies shows that the imbalance is generated by the foreign exchange funding, which is covered by the population’s deposits at a small rate only. On the other hand, the banks have a comfortable position with respect to the national leu currency, with deposits outstripping the loans.
 
The difference between the foreign exchange lending and deposits totalled 5.15 billion euros in July, marking a slight rise on June when they totalled 5.09 billion euros. While the difference between leu deposits and leu lending is positive, it dropped to 2.79 billion euros in July from 2.98 billion euros in June.
Retail lending saw a 67% rise in July on the same period a year ago, with the balance standing at 8.78 billion lei (or 24.8 billion euros). Deposits, over the same period, climbed just 41% to 78.1 billion lei (22 billion euros).
 
Traditionally, the Romanians had a net crediting position in the banking system. The banks, having an exposure to the population bigger than the drawn money, are in a less comfortable position, being dependent on drawing financing from the foreign markets. However, the local banks passed this spring’s test of the global market liquidity crisis with flying colours, as they kept on receiving financing from their shareholders.
 
At present, several players pay interest rates at more than 11% a year to the leu deposits, which is even higher than the central bank’s key rate of 10.25% a year.
At the same time, figures show that the leu borrowing is lower than the euro one, since we are dealing with low-value consumer lending.
Even though the leu deposits outstrip the extended loans on an aggregate level, the situation is uneven by the counties across Romania. Thus, the population in 20 counties contracted leu loans having a higher value than the set deposits.
 
In the south-western counties of Mehedinti and Caras-Severin and the southern Gorj and Dolj counties, the locals failed to find sufficient incomes to save money in keeping with the contracted loans. But such loans have insignificant values. In fact, the GDP per capital confirms such a situation, with most of the counties showing imbalances in the national leu currency terms being those with a GDP per capita below the national average of 5,900 euros, according to the National Commission of Prognosis.
 
Bucharest fares best by these standards, with the July deposits being by 2.3 billion euros higher than the leu loans of the locals. The capital city, in fact, has always been on the top spot in terms of savings, since wages here are much higher, i.e. by 35% than in the above-mentioned counties.
Other counties that fare well in terms of the balance of leu deposits and leu lending are Cluj, Brasov and Mures (central Romania) and Prahova, in the south. Such counties recorded positive differences worth 100 million euros each.
 
The foreign exchange imbalance between the deposits set by the Romanians and the loans they took in July puts Bucharest, Cluj, Constanta and Iasi on the top spots, with deposits being higher than lending by more than 300 million euros.
The less vulnerable counties in terms of the discrepancy between the population’s deposits and loans are Harghita and Covasna (central Romania), Dambovita in the south and Bacau in the east, where the foreign exchange lending is higher by up to 20 million euros than the savings.
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