The total household and non-financial corporate debt kept an upward trend last year, yet at a significantly slowed-down rate of 4 percent, compared to 9 percent in 2022 and 12 percent in 2021, shows the 2023 Annual Report released on Thursday by the National Bank of Romania.
Thus, at the end of 2023, the combined debt level reached RON 705.6 billion, while the debt per GDP ratio dropped 2.7 percentage points to 45.5 percent.
At sectoral level, companies sought financing to an equal extent from non-residents and resident financial institutions, with post-pandemic developments highlighting the rising importance of domestic bank lending over FDI.
Thus, loans from Romanian credit institutions account for 42 percent of the indebtedness of non-financial companies (up by 1.7 percentage points compared to the end of the previous year and 5.7 percentage points up compared to December 2019). The FDI loans dropped to 43 percent of the total (from approximately 45 percent in December 2022 and December 2019).
On the other hand, the population mainly sought financing from local credit institutions (88 percent). Starting with the second half of 2023, an acceleration of household financing from non-resident financial institutions was noticeable.
The National Bank points out that 2023's less favorable economic developments were also reflected in the financial situation of the companies. Thus, the most important companies reported a net profit decrease (-12.6 percent) in H1 2023 and the reduction of return on capital by approximately 3 percentage points compared to the first half of 2022. The debt to capital ratio, however, remained at 1.4, and the overall liquidity ratio decreased slightly to 120 percent.
The report also shows that household savings continued at a sustained pace in 2023. Holdings of financial assets increased by 1 percent in 2023 (annual real-terms variation), while their share in total assets rose to 63 percent (+1 percentage point compared to 2022).
Deposits continued their upward trend, although at a slower pace compared to other financial assets (4.7 percent in real terms, in 2023).
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