Loans granted by NBFIS in Romania, record high in 2023

At the end of March, the Romanian Parliament adopted a draft law that provides for the capping of interest rates on mortgage and consumer loans (up to RON 100,000), granted by NBFIs. Thus, the total costs of the loan would be limited to double the amount borrowed, but there are also daily interest limits, depending on the amount of the loan.

The annual percentage rate of charge (DAE in Romanian) on mortgage loans for real estate investments would be limited to no more than 8 percentage points above the lending facility interest rate (currently 8%, so the maximum level would be 16%), and consumer APRs it cannot exceed more than 27 percentage points, so the maximum level would be 35%.

At the time of drafting the analysis, the law had been sent to the President of Romania for promulgation and will be applicable 90 days after its publication in the Official Gazette.

As share of the total, the NBFIs included in the multiple lending activities category granted almost 97% of the total loans, whereas the institutions included in the financial leasing category lent only 1.9% of the total, according to the data at the end of 2023, published by the National Bank of Romania (NBR).

Loans by NBFIS: households in RON, companies in EUR

Almost 89% of the loans granted by NBFIs to households were in RON, 10.7% of the total were in euro and 0.6% of loans in other currencies, in December 2023.

"Compared to the end of 2022, we note a 19% increase in the share of loans granted to the population in euro, and of only 4% increase in the share of loans in lei. At the other end, 82% of the loans granted by NBFIs to non-financial companies were in euro, followed by those in lei, with a share of 18% of the total, according to NBR data.

From the maturity perspective, we observe that 58% of the portfolio of loans in euro granted by local NBFIs to non-financial companies had a maturity between 1 and 5 years, 21% had a maturity of more than 5 years, and 4% of less than a year", said Diana Florescu, KeysFin economic analyst, one of the most important providers of business information solutions in Romania.

UniCredit Leasing Corporation IFN remained the largest NBFI in Romania by total assets, of RON 5.8 billion, which represented 11.6% of the total in 2022. BCR Leasing IFN ranked second with total assets of RON 3.6 billion, or 9% of the total, followed by Agricover Credit IFN, which recorded the largest annual nominal increase in top 10, of RON 842 million to RON 2.9 billion in 2022. Deutsche Leasing Romania IFN follows in the top 5 with RON 2.6 billion and BNP Paribas Leasing Solutions IFN ranked 5th after the smallest nominal and percentage advance in top 10, according to data from the Ministry of Public Finance analysed by KeysFin specialists.

From the Net Result perspective, the Fondul National de Garantare a Creditelor pentru Intreprinderile Mici si Mijlocii SA – IFN (10th place by total assets) had the highest profit among local NBFIs, of almost RON 180 million and generated 14.9 % of the total in 2022. In second place, after the net profit recorded in 2022, there was UniCredit Leasing IFN with RON 122 million, followed by BT Leasing Transilvania IFN with RON 85.9 million in 2022.

Non-performing loans, decrease in 2023

The rate of non-performing loans granted by NBFIs decreased by 18.8 percentage points (p.p.) from December 2022, to 3.2% in September 2023, the most important adjustments being registered in the non-financial companies (-18.3 p.p.), to 2% according to NBR data. However, the rate of non-performing loans granted by NBFIs to the population was more than 2 times higher than that of bank loans to the population (6.6% compared to 3.8% in the case of bank loans).

The analysis is based on the results of 170 NBFIs out of the 177 included in the General Registry at the end of September 2023 (94%).