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September 27, 2022

E&Y: Lending to stagnate in the next nine months

The Cypriot debt-crisis is a timely reminder that the problems in the Eurozone are not over and that economic recovery for the region is on a fragile, uneven trajectory, but the Eurozone Financial Services Forecast, developed by Ernst & Young and Oxford Economics professionals, predicts that, while localized problems can’t be ruled out, the collective pain for the financial services sector in the Eurozone is almost over, a press release informs.

Lending to businesses and households fell 1.7 percent across the Eurozone last year and this contraction is expected to continue in 2013, but at a slower rate of 0.5 percent. As a result of the rise in non-performing loan (NPL) rates in the peripheral economies NPLs in the Eurozone will peak at a Euro-era high of 7.2 percent this year, up from an estimated 6.7 percent at the end of 2012.  “In Romania I’d rather expect no lending growth during the next nine months, with a slight growth of lending to businesses and a stronger one for mortgage loans but a decline of consumer loans. (…) Anyhow, even a slight increase in lending would not be sufficient to support the economic growth to such an extent to contribute significantly to limiting the evolution of non-performing loans. Thus, although at a lower step, the NPL will continue to grow during the next 6-9 months.” explains Gelu Gherghescu, Assurance & Advisory Partner at E&Y Romania.

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