AMID THE FINANCIAL CRISIS: Non-government lending drops for the fourth month in a row

Ana Săbiescu

The volume of loans taken out by the companies and population shrank for the fourth month in a row, reaching 198.056 billion lei, after dropping 0.5% in June MOM. Non government lending dropped 0.7% over the previous month in May, after losing 1% in April and 2.1% in March.

After the drop in June, the lending growth rate slowed even further, to 11.2% percent a year, from 15.9% a year in May, according to data presented by Romania"s Central Bank yesterday.

Leu-denominated household loans lost 1.1% in June, dropping to 39.606 billion lei, and corporate loans dropped 1.4%, to 41.322 billion lei. On June 30, 2009, forex-denominated household loans stood at 59.980 billion lei, up 0.2%, over the month of May, whereas forex-denominated corporate loans shrank 0.2% MOM, to 57.147 billion lei.

Government credit increased 232% YOY

In turn, government credit (loans taken out by central and local administrations social security institutions etc.) increased 10.7% in June, to 36.74 billion lei, posting the highest monthly increase since March, when it had increased 18% over February. At the end of June 2009, government credit had nearly tripled in nominal terms over June 2008.

• Bank deposits increased for the third month straight, to 158 billion lei

Deposits in lei and foreign currencies of the population continued to grow in June, rising 1.7% over May, to 158.039 billion lei, according to data published by the Central Bank. In May, deposits grew 0.5% over April, to 155.37 billion lei, after rising 0.3% in April over March.

Still, as interest rates for deposits are dropping, the annual growth rate for deposits attracted by banks dropped to 12.3% in June, from 13.1% in May.