National bank's governor states growth of loans of consumer, real estate not presenting risk of over – indebtedness in Moldova

Chisinau, 28 December /MOLDPRES/ – The exponential growth of real estate and consumer loans, contracted by individuals in recent years, will not lead to over – indebtedness, if there are respected lending standards, says the governor of the National Bank of Moldova (BNM), Octavian Armasu.

Interviewed by agency, the BNM's governor has mentioned that "increasing mortgage lending is, in many ways, a beneficial thing. Firstly, by means allowing many families to live in their own dwellings from now on. But, of course, an exaggerated increase in lending in the field and an eventual relaxation of lending standards can lead to a high level of indebtedness of households”. However, in Moldova "share of GDP granted is relatively low – 20.08 per cent in the second quarter of 2019, compared to developing countries (60 per cent – 70 per cent) and developed states (around 100 per cent).

Recently, there has been an increase in loans granted for purchase or construction of dwellings and consumer loans. "If we analise the dynamics of loans by branches during 10 months of 2019, we find that the increase of loan portfolio in banking sector (+MDL 4,568.7 mln) is due in large part to growth of loan portfolio granted for purchase or construction of dwellings by MDL 1,942.1 mln (49.2 per cent) and consumer loans with MDL 1,520.4 mln (29.7 per cent)”, specified Octavian Armasu.

The BNM's governor has estimated that "quality of these loans is favourable at present. The loans granted for purchase or construction of dwellings and consumer loans classified in non – performing categories hold small weights in total loans granted in respective branches – 2.5 per cent and 3.9 per cent, respectively, against total rate of non – performing loans of 10 per cent”.

The quality of loans is monitored by BNM within supervisory process of banks.