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6 th ALB National Conference

6 th ALB National Conference. Two years of crisis Dynamic and diagnosis of consumer credit in Romania versus Europe. Gilles Zeitoun – Cetelem IFN Bucarest 18 nov 2010. The European market accounts for 26% of the global market. Consumer C redit European Market :

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6 th ALB National Conference

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  1. 6th ALB National Conference Two years of crisis Dynamic and diagnosis of consumer credit in Romania versus Europe Gilles Zeitoun – Cetelem IFN Bucarest 18 nov 2010

  2. The European market accounts for 26% of the global market • Consumer CreditEuropeanMarket : • 1290 bn € outstanding end 2009 • #2 Region, equal to Asia –Mid.East • Averageoutstanding per capita : relativelylow in Europe • Eastern countries pull the average down • Western European countries have amountslowerthanmanyotherindustrial countries (USA, Canada, Japan,…)

  3. The Romanian consumer credit market • Consumer creditoutstanding : 73.8 bn RON = 17.3 bn € (sept 2010) • A small part of Europeanoutstandings (1.3%) , but a significant one in CEE Region (#2 afterPoland) • Hugegrowthuntilcrisis : +87% 2007/2006 , +30% 2008/2007 •  It wenttoofast, and led to a highlevel of indebtedness in consumer credit • Evenhighergrowth for foreigncurrencyloans, whichaccounts for 52% today • 30 % of total outstanding end 2006 • 44 % of total outstanding end 2007 • 50 % of total outstanding end 2008, stabilisedafter (52% in sept 2010) •  A risky situation

  4. 113% 86% 71% 71% 46% 42% 49% 32% 28% 30% 27% 26% 24% 20% 14% 14% 19% 9% 13% 4% 6% 100% 25% 22% 33% 35% 27% 80% 45% 47% 53% 61% 69% 70% 69% 73% 78% 78% 60% 83% 86% 88% 88% 90% 96% 40% 78% 75% 73% 67% 65% 55% 53% 47% 20% 39% 31% 31% 30% 27% 22% 22% 17% 14% 12% 12% 10% 4% 0% Netherlands Germany Belgium Czech Rep Russia Italy Bulgaria Mexico Norway Slovakia Algeria Romania Portugal Spain France Morocco Hungary Poland Turkey Brazil Argentina % of consumer loans on total outstanding % of housing loans on total outstanding % of housing + consumer loans / GDP Total credit penetration in Romania : near the european average • Romania : • Mortgage + credit consumer outstandings = 20% of GDP, in the average • But one of the lowest proportion of mortgages

  5. Encours de crédit à la Encours de crédit à la consommation par consommation en % habitant (en €) du PIB 15,9% 14,9% 3000 16% 2773 13,5% 14% 12,2% 2379 2500 12% 2018 10,1% 10,1% 1889 2000 9,5% 1874 1844 9,0% 8,9% 10% 8,8% 8,2% 7,8% 7,4% 1500 8% 6,3% 1303 5,9% 1086 6% 4,4% 4,2% 4,3% 1000 866 809 718 665 4% 557 500 1,4% 500 392 2% 261 228 181 35 0 0% All. Esp. Port. Hong. Pol. Bulg. Turq. Rus. Arg. Alg. Fr Slov Mex Ita Rou Bré Mar Rep.T Bel Romania shows one of the highest level of consumer credit penetration • Romania : • Credit consumer outstandings = 15.9% of GDP • Consequence of the fastdevelopment of the consumer creditduring 2003-2008 Consumer Credit outstanding per capita (€) Consumer Credit outstanding as % of GDP

  6. The European market shrinked in 2009 Market Evolution 2009/2008 Consumer CreditOutstandings European consumer creditoutstandingsshrinked in 2009… …but lessthanotherdeveloppedmarkets New credit production decreasedmuch more Consumer Creditmarketevolutionishighlylinkedwith GDP and Consumptionevolution… …which shows bigdifferencesbetweenindustrialized and developpingemerging countries

  7. Romanian market was one of the most affected markets in 2009 and 2010 • General drop in new credit production , but bigdifferencesbetween countries and betweenproducts • The cardactivity has withstoodwell • While the auto loans and the currencyloans have decreasedmuch • Romania : • -50% drop estimated in production : one of the mostaffected countries Consumer Credit production growth Source: Global Insight

  8. Romania : consumer credit outstanding decreased in 2009 and 2010 • Romania : • Outstandingevolution 2009/2008 : - 5.8% at constant exchange rate • Outstandingevolution sept 2010 / sept 2009 : - 3.7% at constant exchange rate • Outstandingdroppedlessthanseveralother countries becausecreditdurations are longer (Real exchange rate )

  9. Romania : why such a drop in consumer credit production, and what outlook ? • Like in most of the countries, the reasons of the drop are : • Decrease of consumption • Fear of the future, uncertaintyregarding job stability and future revenues • Increasedinterest rates, due to creditriskrise and to liquidity issues • Tightenedgrantingrules on banks’ side • But in Romania, the drop isstronger and the recoveryof consumer creditwillbe longer : • The economiccrisisisparticularlysevere and is lasting (GDP : -7.1% in 2009, -1.9% est. in 2010) • The pre-crisis consumer creditgrowth has been toofast, leading to excessive endebtedness on long creditdurations •  limited room in households’ budget to add new credits •  long-lasting creditrisk issues, limitinginterest rates decrease and release in grantingrules • Lack of confidence of consumerstowards consumer credit, fostered by endebtedness situation and public debate about OUG 50 • Weexpect the consumer credit production to recover the 2008 levelonly in 2013, whileitis in 2010 • or 2011 in western european countries

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