DB: Nonperforming loans to hit a 15-20% high in 2010

Nonperforming loans (NPL), the major concern of banks, will come to make up 15-20 percent of total loans by the end of the first half of 2010, five times more than at present, according to a study by Deutsche Bank.

The pessimistic estimate of the German giant, that expects an exchange rate of RON 4/€1 at the end of this year and will compete for brokering the eurobond issuance that will be launched by the Romanian state in September, is supported by independent analysts, but not by bankers.

"In Romania and Bulgaria GDP [gross domestic product] and credit growth only started to slow down significantly at the beginning of this year. Thus, the rise in nonperforming loans has not been too strong yet. But given the high share of consumer loans in total loans (40-50 percent), the high debt burden of households (30 percent of monthly income) and the severity of the economic downturn, we expect asset quality to deteriorate sharply over the next 12 months (i.e. an NPL ratio of 15-20 percent)," according to the German bank's analysis.

"Deutsche Bank's estimate is one of common sense, if we consider the way in which loans were granted in Romania. I only hope that we will not exceed this 15-20 percent. The crisis began some time ago, and there were no significant changes in the Romanian banking system in terms of the share of nonperforming loans," Managing Partner BAC Romania consultancy company, Matei Paun, said.

The official added that the main problem of lenders is corporate loans, which have very high values. "The only hope is that banks will draw a line and begin claiming on debts and foreclose mortgages. In this way they will create liquidity, also in the real estate market, even if prices are rather low. At least it will be a place to start. Banks did nothing in the past year to remedy this situation, and it is time they started admitting that they have problems," Paun indicated.

standard.money.ro