“In Romania and Bulgaria GDP and credit growth only started to slow down significantly at the beginning of this year”, Deutsche Bank said.

Deutsche Bank’s estimates were based on IMF data on previous episodes of credit booms Romania and Bulgaria.

“But given the high share of consumer loans in total loans (40-50%), the high debt burden of households (30% of monthly income) and the severity of the economic downturn, we expect asset quality to deteriorate sharply over the next 12 months (i.e. a NPL ratio of 15-20%)”, according to the report of the bank.

Romanian analysts recently interviewed by Wall-Street said that as economic contraction deepens and jobless rate escalates, thus affecting borrowers and companies’ ability of paying their monthly rates before due dates, NPL ratio will continue to grow further in the second half of 2009 and 2010.

Doubtful and past due loans accounted for 0.85% of total banking system lending in April, according to data provided by National Bank of Romania.