Schreiner, Volksbank: Mortgage demand plunged 95%

“The problem is not whether banks want to grant loans. I believe that people are reluctant enough when it comes to taking out a loan, because they do not yet know whether they will lose their job in the coming months and how long the crisis will last. Once these problems are solved, loan demand will resume growth,” Schreiner said.

Volksbank’s President added that Romanian lenders are usually subject to a high level of provisioning, but do not have liquidity-related difficulties. According to Romanian Accounting Standards (RAS), the Austrian bank will register losses at the end of the first three quarters of 2009, but Schreiner expects €46-48 million in gross profit at the end of 2009, based on International Financial Reporting Standards (IFRS).

The official added that prices on the real estate market have begun levelling off, after the sharp increase in the past few years.

“A recent study indicated that there is need for 300,000 new apartments in Bucharest. Things have not changed. But uncertainties regarding taking out a loan are still present. People wonder: will I lose my job? how long will the crisis last? how will market prices evolve? I believe that Romanians must first regain their confidence in order to resume borrowing,” Schreiner said.

The bank president said that the financial products offered by banks have not changed significantly compared to last year. According to the official, countries such as Romania, Bulgaria, and the Republic of Moldova will offer growth opportunities for players in the banking system.
“Romania will also provide development possibilities for more sophisticated investment products. Now, we are just beginning, considering that investment funds are administering small amounts. For now, in the case of lenders, we are talking only about profit from interest rates, but in countries such as Austria, the ratio is 50-50 percent between the gain from bank rates and that from investments,” Schreiner indicated.

Volksbank, the third-largest bank on the local market in terms of assets, gained its position by focusing on mortgages. At the end of the first six months, the bank had an asset portfolio worth €5.4 billion, up 20 percent year-on-year. The bank’s solvency rate is currently 16-17 percent, according to Schreiner. Volksbank’s market share was 6.8 percent at the end of 2008.