Financial crisis could cap lending growth to 15-20%, Millennium Bank says

Romania's lending market could edge up at 15 – 20 bp this year, as the economy is severely dented by the international financial crisis, much slower than the 80% increase anticipated last year, according to deputy general manager of lender Millennium Bank, Dan Sandu, cited by NewsIn.

Representatives of Millennium Bank expect the credit market to recover by year-end following the price reassessment on the real-estate market, as the demand for housing units remains high.

Liquidity inside the Romanian banking system reduced to around 6-7 banks due to a lack of confidence in the market generated by the financial turmoil.

An agreement with the International Monetary Fund (IMF) would bring a breeze of trust to market players and would drive liquidity at the level of the entire banking system.

Millennium Bank Romania estimates to break even in 2011

“I think we will remain on red in 2011 as well. We should see an operating break-even in 2011, in line with our initial plans, that weren’t very aggressive. However, the margins were too low anyway”, Sandu added.

The bank's losses this year should be smaller compared to 2008, when they totaled 34.9 million euros. The lender is currently revising financial estimates for the year.

Millennium Bank operates 72 units at present and plans to reach 75 by the end of the month and 100 by the end of 2010.

Sandu explained the lender is trying to orient its clients towards web transactions, which have the advantage of a three-fold lower cost than operations over the counter and estimates some 70 percent of transactions made by the population are on the Internet.

Millennium Bank halted non-secured lending

The lender stopped granting non-secured personal need loans since July 2008, according to Sandu. Non-secured loans for the population currently account for 30 – 40 percent of the credit portfolio for natural persons.

Millennium Bank targets its credit portfolio 45 percent to the population and 55 percent to legal persons.

The largest part of credits granted by Millennium Bank are in euros, as interest rates are much smaller for this currency, while loans in lei account for only 12 – 13 percent of the portfolio.

Shareholders of Millennium Bank Romania hiked the total capital by 285.42 million lei in February by issuing 2,854,200 new shares. The share capital was raised 62.6 percent to 370.46 million lei.

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