Banks expect increase in demand for housing loans and consumer loans

Banks expect the increase in demand for real estate and for consumer loans this year, according to a survey conducted by EY Romania, under a partnership with the Romanian Banking Association (ARB).

Thus, 90% of banks expect an increase in demand for housing loans, and 80% for consumer loans.

One of four banks predicts a significant increase in housing loans.

The legal framework for insolvency remains the main issue that discourage lending, 95% of the banks say.

Banks also anticipate a slight growth of credit demand from firms, but also a higher demand for hedging products.

The Banking survey was conducted based on a questionnaire developed with the management of the ARB member banks, joining together credit institutions with a total market share in terms of assets of approximately 90%.

Main conclusions of the analysis:

– Most banks expect a slight improvement in the economic environment;

– 46% of banks expect an improvement in employment prospects in the economy;

– Expectations regarding the scope of consolidation in the banking sector have intensified;

– 55% of banks expect to reduce the number of employees slightly more than in 2014 (29%);

– However, costs with employees will not drop in more than 80% of banks (32% will increase);

– Banks are more interested in sale of assets than in 2014, but in most cases it is about non-performing loans;

– Risk management and in particular reputational risk occupy the top two places on banks’ agenda;

– Lending policies will partially unwind in agriculture, industry, IT, health and the SME segment;

– Over 80% of banks expect provisioning expenses for credit risk not to increase or even to drop (40%);

– Over 90% of banks expect financial results to improve, as compared to 80% in 2014;

– Certain legislative initiatives in terms of consumer and how they are promoted may affect the financial discipline and transmit erroneous messages about banks practices.