The Romanian households increased their stock of bank loans by RON 12.7 bln (EUR 2.54 bln) in 12 months to August 2024 (+7.4% y/y to RON 185 bln), compared to only RON 0.3 bln (+0.2%) in the previous 12-month period, according to data published by the National Bank of Romania (BNR).

The higher net wages drove part of the surge in private consumption in 2024, but bank lending (facilitated by households’ improved confidence pinpointed by their real incomes) contributed as well.

Most of the rise in the stock of retail loans was in the consumer loans segment, where the stock of loans increased by RON 9.7 bln (+15.5% y/y to RON 74.4 bln) in 12 months to August 2024 – which accounted for 77% of the total rise in households’ loans in the period and was nine times larger compared to the RON 1.1 bln advance in the previous 12- month period. This contributed directly to private consumption.

The stock of mortgage loans increased by only RON 2.8 bln (+2.7% to RON 107.6 bln) in 12 months to August 2024, but this compares positively to the RON 0.8 bln decrease in the stock of mortgage loans in the previous 12-month period.

More precisely, Romanian households started borrowing at a more sustained rate in February 2024, after the inflation eased and the consumer confidence rose in line with the real wages. The loan interest rate, which decreased later in the year, was of secondary importance in the loan-taking decision.

Separately, the Romanian households were able to increase their stock of bank term deposits in 12 months to August 2024 – but at a lower rate compared to the previous period: by 18% y/y or RON 29 bln (to RON 192 bln – more than the stock of bank loans) compared to +46% (+RON 51 bln) in the previous 12-month period. So, the households were able to save in term deposits in 12 months to August 2024, more than twice what they borrowed from banks. 

This was possible thanks to massive (+RON 39 bln) supplementary bank (sight and term) loans boosted by higher nominal incomes. 

The propensity to save was stronger in the previous 12-month period when households diminished their sight deposits (-RON 17 bln) to place their money in term deposits (+RON 51 bln), encouraged by higher deposit interest rates. 

The propensity to save has diminished since the beginning of this year, concomitant with the rise in borrowing.

iulian@romania-insider.com

(Photo source: Ungureanu Vadim/Dreamstime.com)