Bankers cut back on retail lending

Local lenders have seen their loan book shrinking sharply over the past six months. Bankers don’t expect any major turnaround in the coming period, assuming that “the environment stays relatively stable”, despite the state first time homebuyers program.

Sharp fall in 2009

Raiffeisen Bank’s loan portfolio for the first half stands at merely 30% of last year’s half results, said the director of the retail division, Razvan Munteanu.

“As an aggregated median of the past six months, we granted around 30% of the last year’s sales, in terms of volume. As for small business lending, it is more difficult to estimate, as credit rollover need to be considered”, said Munteanu.

Moreover, no major turnaround, assuming that “the environment stays relatively stable”.

When asked about a sustainable level of lending, the current level is by far below, “but people need to see how far we are from a reasonable level”.

Raiffeisen’s net profit for its operations in Romania and Moldova dropped in first quarter by a staggering 55%, to 17 million euros, from prior-year period, while the group’s total assets increased by 3.4% in January-March.

Raiffeisen’s loan book shrank 4.79% in first quarter from Q4 2008, to 4.38 billion euros, as business loan portfolio account for 39% and consumer lending 61%.

Erste Bank: Banks in Romania should focus on interest reduction

The primary target for the Romanian banking industry should be the reduction of interests, said Wednesday the chief executive officer of Erste Group, Andreas Treichl, who added he expected NBR to discharge liquidities in the coming period and to secure the stability of exchange rates.

“I think the central bank will discharge the cash flow in the coming period. The objective should be the reduction of interests. Another essential problem is the stability of the currency exchange rates”, said Treichl.

The Romanian subsidiary of Erste Bank, Banca Comerciala Romana will seek to convert its lending activity in lei.

As for the current economic crisis, Treichl said that it had not reached its endpoint and stressed the importance of a political backing in the business environment, as the efforts made in this direction are still rudimentary.

“The World War II would never have existed if there hadn’t been the poor economic environment and the crisis in the 30’s. The crisis didn’t end, but due to lawmakers’ prompt response, the risk of a political crisis is as high as it was. There are things we still don’t understand, such as working better together, political environment and business environment”, said the head of Erste at a ceremony at which president Traian Basescu attended.

“I have seen a major effort of authorities over the past 12 months to weather crisis. I am aware that Traian Basescu was not very pleased with the IMF-led financial package. A decision like this is never easy to make. We didn’t enjoy receiving financing from the state, but we have seen this practice is common in many countries”, Treichl continued.

Erste Bank was one of the Austrian banks who called upon state package of 100bn euros which it received in the form of capital injection and state guarantees.

Raiffeisen Bank Romania allots 50 million for loans under “First Home” program

Raiffeisen Bank Romania approved a 50 million euro budget for credits under “First Home” program, amount that can be increased depending on the market conditions, said the bank's vice president responsible with the retail division, Razvan Munteanu, cited by NewsIn.

The “First Home” program will not lower interests significantly, said Munteanu, unless interests for deposits reduce and Romania's risk perception improves.

Munteanu said he does not expect the “First House” program to have an impact over credit costs in general, but can contribute to reduce house stocks, prompting a gradual advance in apartment constructions for the middle class. He added it was important that the final reading of the program to stimulate new apartment sales or starting new constructions.

Premier Emil Boc explained on June 14 the government will impose banks some conditions related to the margins practiced, so that banks granting mortgage loans under “First Home” program can apply a margin of maximum 4 percent per year over the EURIBOR interest rate at 3 months for credits in euros and a margin of 2.5 percent the most over the ROBOR rate at 3 months for credits in lei.

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