asociaţia societăţilor financiare - alb românia
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Asociaţia Societăţilor Financiare - ALB România The Financial Companies Association – ALB Romania. 8 th ALB National Conference Evolution of the consumer credit in Romania. Bucharest, November 15 th , 2012. The European market accounts for 24% of the global market. - PowerPoint PPT PresentationTRANSCRIPT
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Asociaţia Societăţilor Financiare - ALB RomâniaThe Financial Companies Association – ALB Romania
8th ALB National Conference
Evolution of the consumer credit in Romania
Bucharest, November 15th, 2012
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The European market accounts for 24% of the global market
The global outstanding reached 5,597 billion € at the end of 2011, +4.5% compared with the end 2010
o 39% of the global outstanding is in North America: United States (32%), Canada (6%), Mexico (>1%)
o Asia and the Middle East represents the second group with 29% of the global outstanding
o Europe incl. Turkey and Russia is the third one with 1314 billion €, or 24% of the global outstanding
Consumer Credit Outstanding per Region at the end of 2011
Sources: central banks, Asteres estimates
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Contrasting dynamics by regions
The overall increase of the global market (+4.5%) demonstrates a certain amount of momentum
However, this increase conceals a decoupling between emerging markets, with brisk growth, and developed markets (except North America) which are struggling or even in decline
o South America achieved the highest growth
o Asia and the Middle East (including Japan) posted a growth of 5%, but slowed down by Japan, the first market of the region. Excluding Japan, the growth of this region was 16%
o The markets in North America and in Europe have reached maturity and present more moderate growth
The market picked up in North America (+3.9% in 2011 following a fall of -1.7% in 2010)
In Europe (+1.3%) the market was driven by emerging economies, outside EU, with growth of +41% in Russia and +34% in Turkey while the EU27 saw a fall of -2.9%
Evolution 2011/2010 of Consumer Credit Outstanding per Region (%)
Sources: Asteres estimates
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EU27 : the consumer credit outstanding unequally distributed
Consumer Credit Outstanding at the end of 2011 (EU27)
Romania : Outstanding 14,6 billion€ = 1,4% of EU27
The markets are unequally distributed: the top 5 markets account for 75% of the total, while representing 63% of the population
The European market can be split into 3 main groups :
o Northern Europe: 56% of the outstanding (41% of population )
o Southern Europe: 37% of the outstanding (39% of population)
o Eastern Europe : 7% of the outstanding (20% of population)
Sources: central banks, Asteres estimates
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This was due to the degradation of the European financial and economic environment:
o Low consumption in most of the countries (weak GDP growth, austerity measures in some countries)
o High unemployment rate ( limiting access to the credit)
Only 7 out of 27countries posted a growth of the outstanding in 2011
Excluding Slovakia, all Central & Eastern countries fell
Romania was also adversely affected in 2011 : - 3.5%
EU27: for the 2nd consecutive year the consumer credit outstanding dropped by 2.9% in 2011
Sources: central banks, Asteres estimates
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A clear link between the consumer credit growth and the GDP growth
Growth of the consumer credit outstanding versus of the GDP growth (2011/2010)
3 countries showing a decrease in outstanding: Romania (-3.5% yoy), Poland (-2.7% yoy) and Bulgaria (-2,2%yoy)
Some of the emerging countries have their credit consumer markets growing fast : Argentina (+50% yoy), Brazil(+20% yoy), Turkey (+32% yoy) and Russia (41% yoy)
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Credit to individuals (consumer and mortgage) compared to GDP
Total credit outstanding to individuals ( consumer and mortgage) related to GDP in 2011
The total households indebtedness (consumer and mortgage) compared to GDP is low in Romania (17%)
Romania is among the countries with the lowest share of mortgage credit in total credit (35%). However it increased compared to 2010 , when it was 31%
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Romania : high consumer credit penetration in % of GDP
Consumer credit outstanding divided by GDP (2011)
Consumer credit penetration is important in Romania : 10.7% of GDP at the end of 2011
o However, it is decreasing from the 12.6% of GDP at the end of 2010
Average outstanding per inhabitant in Romania in 2011: 671€ (also decreasing from 704 € in 2010)
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A Romanian market particularly hit by the crisis in 2009, recovering progressively
Consumer Credit Outstanding (banks + IFN) - June 2012:
65.2 bn. RON, decreasing for the fourth consecutive year:
One of the most shaken markets:
A very fast growth before the crisis: +82% and +34% in outstanding 2007/2006 and 2008/20067)
Then a significant drop in 2009: -60% in production
Slow recovery in 2010 (+10%) and in 2011 (+10%) in 2011
We expect the consumer credit production to recover the 2008 level only in 2013 or 2014
A small market at the European level: 1.4% of the outstanding
but important in the Central & Eastern region (#2 after Poland)
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IFN results: New credit granted by Product TypeS1-2012
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Source: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
EUR 225.87million
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IFN results: New credit granted for Personal Consumption
S1-2012
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Source: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
EUR 206.51million
Gradual recovery in terms of new credit granted for personal consumption in S1-2012: +3.7% vs. S1-2011 :
o Revolving loans including credit cards: +18% S1-2012/S1-2011
o Direct personal loans: +4% S1-2012/S1-2011
o Credit at POS: -19% S1-2012/S1-2011
Direct Personal Loans
Credit at Point of Sale
Revolving credit including credit cards
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Globally, the cost of risk (coming from new provisions) of the Consumer Credit companies increased strongly in 2009, and decreased in 2010 and 2011, thanks to a renewed approach both on lenders and consumers sides.
Banking sector :
The weight of the foreign currency loans is very important, representing a threat for the households’ financial health (% of foreign currency loans among total consumer credit outstanding):
o 30% in Dec. 2006 48 % in Dec. 2008 56 % in Dec. 2010 57% in Jun. 2012
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Credit Risk Evolution
Sources: National Bank of Romania
o The rate of non-performing loans has increased from 11.9% of total loans in Dec. 2010 to 14.3% in Dec. 2011 finally reaching 16.8% in June 2012 (aggregate level: corporate + individuals loans)
o But this is a stock: it increases because the non-performing loans remain a long time in the books. Only the flux (new non performing loans) trigger new provisions.
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Conclusion
After the difficult 2009-2010 period, the Romanian consumer credit market is progressively recovering :
o In terms of volumes – but this will need time
o In terms of credit risk : we believe the non performing loans will reach the peak in 2012, followed by a better trend starting with 2013
The regulatory environment is changing fast
o Globally in a good direction: favoring transparency (ex : OUG 50 ) and responsibility of consumers and lenders (new NBR Regulation - foreign currency loans)
o New regulations expected, especially from the EU (i.e. Shadow banking)
The approach of the lenders has been reviewed during the crisis.
o Processes (incl. granting rules)
o Transparency (ex : costs)
ALB Code of Conduct in place