Despite shrinking interest rate margins, banks have managed to maintain their profitability Loans have come to account for a little over half of total banking assets, stated Nicolae Danila, BCR executive chairman on Tuesday.

Despite shrinking interest rate margins, banks have managed to maintain their profitability, specifically in regards to lending expansion. At the same time, the rising exposure to customers did not bring a considerable increase in risk costs.

"In 2006, the growth of total assets in the first four months slowed down to 5 percent, compared to a figure of 9.8 percent recorded during the similar period of 2005. Lending saw speedier growth, though, going up by 12.3%, compared with a rate of 7.6% last year," stated Danila during the "Banking on Romania" seminar organised by the Financial Times and The Banker magazine.

Danila also pointed to a considerable slowdown in the growth of the population's savings. As a result, cumulated growth in the first four months amounted to only 3%, a significant contrast to the 11% registered during the corresponding period of 2005. Things are even worse where companies are concerned, as the volume of deposits dropped by 1.4%, after previously rising by 4 percent last year.

"The situation is sustainable, but only on short term," Danila feels.

Consumer financing was the most dynamic segment, advancing by 24.5% during the first four months of this year, from 17% during the same period of last year. Statistically, mortgage loans grew slower, by only 2.6% this year, compared with a 12% figure at the beginning of 2005. However, the image is distorted by the fact that in many cases mortgage-guaranteed personal loans come to substitute mortgages or real estate loans. Under the circumstances, the volume of real estate loans in total retail lending decreased by more than three percentage p