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November 25, 2022

Banks project lending activity will be resumed in near future

Nevertheless, the legislative framework on insolvency and its implementation could obstruct this process.

Over 80 percent of the banks currently active in Romania are expecting lending activities to grow in the near future, while a significant percentage of them expect loan demand from natural and legal persons to increase, according to the ‘ARB & EY Banking Barometer.’
“Over 65 percent of banks forecast that consumption loan demand in the retail sector will increase and an even more banks, 75 percent, expect credit card demand to rise. A similarly large percentage of banks, 70 percent, project a higher demand for loans from natural persons,” a press release notes.Industry, information technology, agriculture, telecommunications, health, and SME lending policies will become partially laxer, the Banking Barometer states further. However, the legislative framework on insolvency and the application of this procedure will discourage lending activities, over 85 percent of respondent banks believe. “The latest amendments to the Insolvency Code bring improvements in the legislative framework, but we believe there is more to be done as far as law implementation is concerned, in order to convince banks that the situation has improved and they can impose laxer lending policies. The fundamental requirement for ensuring stability in the banking system is to maintain financial discipline,” Radu Gratian Ghetea, chairman of the Board at ARB, stated. Over 80 percent of banks forecast that expenditures related to loan risk provisions will stagnate, while 35 percent believe they will actually drop and approx. 75 percent estimate an improvement in the financial results.
On the medium term, the banking sector is not expected to undergo a large scale consolidation process, as 71 percent of banks project a medium-sized consolidation and only 14 percent a large scale one. According to the survey, banks are interested in purchasing rather than selling loans. The analysis also shows that restructuring procedures in the banking system are coming to a close, since 70 percent of banks will not resort to layoffs in the upcoming period and 20 percent project an increase in the number of employees.

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