November 25 (SeeNews) - The non-performing loans (NPL) ratio of Romania's banking system is expected to increase significantly next year after coronavirus-hit borrowers were allowed to postpone their loan payments, a senior official of the Romanian Association of Banks (RAB) said on Wednesday.
The stability of the banking system and the high degree of capital adequacy give grounds for optimism, but non-performing loans will increase after these ten months of payment delays, RAB honorary president Radu Ghetea said during the FinConf Romania conference live streamed on YouTube.
A government decree issued in April allowed individual and corporate borrowers affected by the coronavirus crisis to delay by up to nine months their monthly payments on bank loans.
According to finance ministry data for end-September, some 330,000 Romanians postponed their credit installments.
The ARB official also said he expects an increase in short-term loans in 2021.
"Those who want to relaunch their production, or individual customers who want to solve some problems will certainly resort to short-term credit. Long-term lending, which involves investments, will resume once the health crisis ends," he added.
The non-performing loan (NPL) ratio of Romania's banking system decreased to 4.06% at the end of September, from 4.58% a year earlier, according data from Romania's central bank.
Return on assets (ROA) and return on equity (ROE) for the first nine months of the year stood at 1.17% and 10.48%, respectively.
The Romanian banking system's capital adequacy ratio rose to 22.76% at the end of September from 19.73% at the end of last year.
Established in May 1991 as a professional association, the Romanian Association of Banks includes currently 33 members, credit institutions with majority private or state-owned capital, branches and representative offices of foreign banks and 9 affiliate members.
(1 euro=4.8730 Romanian lei)