The stock of bank loans dropped by 0.6% m/m, nominally, to RON 384.8 billion (EUR 77.3 billion) at the end of January, according to the National Bank of Romania.

On an annual basis, the advance was 5.7% y/y (+6.4% y/y in December), inferior to the 7.4% y/y consumer price inflation.

In January, the marginal 0.6% m/m decline in the total stock of bank loans was driven by the corporate sector (-1.1% y/y for the non-financial corporations and -1.2% for the non-bank financial corporations) while the stock of loans to households remained steady (RON 173.8 billion or EUR 34.9 billion).

This came against the trend seen over the past year when corporate lending rose more than four times faster than retail loans: +8.2% y/y versus 1.9% y/y.

The sluggish advance of the stock of bank loans doesn’t mean that the banks are downsizing their operations. On the contrary, the new loans extended by banks in Q4 soared by 62% y/y to nearly EUR 3.6 billion. In total, the banks extended EUR 7.2 billion in new loans in H2, but the stock of loans increased by only EUR 2.2 billion.

A small part of the EUR 5 billion new loans “disappeared” or not seen in the stock of loans, was explained by the amount of principal returned by debtors. But the largest part of the EUR 5 billion indicates still large volumes of refinanced loans.

Although refinancing is supposed to ease debtors’ debt burden, the high profits cashed by banks in 2023 show that this was a lucrative business for the banks as well.

iulian@romania-insider.com

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