28 Octombrie 2009
Top 10 counties with the highest delinquency rates
The total value of retail and business loan delinquencies rose to 6.51bln lei (€1.55 bln) in September this year, up 4.27% from a month earlier, and 302% more than a year-ago period, according to data provided by the National Bank of Romania. The delinquency rate in total bank lending climbed to 3.25%, and analysts say visibility remains low for the coming period.
NPL ratio poised to climb until mid 2010
“It is clearly that the number of outstanding loans tripled, but increased from a low level. The current NPL ratio is bad news to banks, as it generates high provisioning costs, but the situation is manageable today, and is not at risk of escalating up to a point where it turns into a system-wide problem”, Ionut Dumitru told Wall-Street.
In the coming period, NPL ratio is expected to climb further, both for retail and small business loans.
What drives borrowers default on their loans?
- Unemployment risk – “We expect the jobless rate to trend upwards until mid next year and this is one of the main reasons behind the growing credit card default and delinquency rates”, Raiffeisen Bank’s senior economist pointed out.
- Falling incomes resulted from pay cuts
- Exchange rates. “As for the exchange rates, it is vital for the leu to stop from falling. Higher exchange rates entails higher delinquency rates”, Ionut Dumitru.
What drives companies default on their loans?
- Precarious finances. “Companies’ financial situation is not expected to improve, but rather worsen, should the economy doesn’t pick up soon”, said the economist.
- Taxes
- Country’s economic performance
- Exchange rates.
Read more on the country’s delinquency rates in September broken down by counties.
10. Teleorman - 4.07%
Leu-denominated loans registered the highest delinquency volume -45.6 mln lei when compared to 1.98mln lei volume for Fx-denominated credits.
9. Neamt - 4.25%
Leu-denominated loans sector led delinquencies, at 75.88mln lei, versus 29.82 million lei for Fx-denominated loans.
8. Hunedoara - 4.44%
In Hunedoara, leu-denominated loans sector led delinquencies once again, with 96.2 million lei, versus 18.98 million lei for fx-denominated loans.
7. Alba - 4.53%
The highest delinquencies recorded in Alba was still for leu-denominated loans – 65.67 million lei, compared to 58.53 mln lei for loans in a foreign currency.
6. Calarasi - 4.67%
Delinquency volume for leu-denominated loans came to 46.54 million lei, while delinquent loans in foreign currency stood at 12.47 mln lei in Calarasi.
5. Olt - 5.06%
Leu-denominated delinquent loans totaled 94.23 million lei, versus 8.13 mln lei for loans in foreign currency.
4. Arad - 5.22%
In Arad, leu-denominated loans sector continued to lead delinquencies, with 80.12 mln lei volume versus 77.34 mln lei for credits in foreign currency.
3. Salaj - 5.24%
In contrast with other counties listed by Wall-Street as problem areas, in Salaj, the leu value of Fx-denominated delinquent loans outpaced the value of leu-denominated loans – with 81.19 mln lei and 33.34 mln lei respectively.
2. Suceava - 5.69%
Leu-denominated delinquent loans totaled 148.9 mln lei, while delinquent fx loans amounted 41.11 mln lei.
1. Bistrita-Nasaud - 8.73%
In Bistrita-Nasaud, the total value of outstanding loans amounted to 203.71 million lei, while total bank lending in the area wasn 2.33 bln lei.
Leu-denominated delinquent loans totaled 132.35 mln lei, versus 71.36 million lei outstanding debt for Fx-denominated loans.