Past Due Loans Up To 15% In Economically Weak Counties

05.30.2011 ZF English

A rising number of clients are having trouble repaying their loans, so that overdue installments have already climbed to 14-15% of overall funding released by banks in less economically developed counties.

The average weight of past due loans neared 9% countrywide in late April, with the highest level registered in Galati, where late payments account for no less than 15.5% in the total volume of loans released to the population and firms.

The volume of past due loans countrywide topped 18 billion lei (EUR4.4 billion) at the end of April, double the level reached a year ago, according to central bank data.

Other counties causing bankers headaches are Ialomita and Alba, where the weight of overdue installments went up to 14.4 and 14.3%, respectively, of the total loans.

"The faster overdue loan increase in certain counties is due to the higher unemployment rate, but in many counties it has been also a question of education. (…)," comments Gabriel Cretu, network and sales manager with OTP Bank.

Clients' payment behavior also significantly depends on the economic development of an area or inhabitants' living standard. Ialomita and Bistrita are two of the counties with the weakest economies, while Galati is a county that depends upon two industries, both of which badly hit by the crisis in 2009 and in the first half of 2010 - the steel and the naval industry.