"Live now, pay later" is the attitude many customers of Central and Eastern European banks have started to adopt, according to a survey conducted by Bank Austria Creditanstalt (BA CA), a member of the UniCredit group. The survey was presented during the annual Conference of EBRD.
"As Western Europeans have been doing for a long time, customers of banks operating in Central and Eastern Europe are focusing on consumption and want to buy goods on the spot. If they do not have enough money, they resort to consumer loans. Demand for this type of financing is on a constant increase," says Martin Mayr, an analyst with BA CA.
In parallel, the survey indicates that consumers are less interesting in saving. According to the study, the Romanian banking market has seen a drop in the number of customers who opened a deposit account, from 16% in 2001 to 10% in 2005. This behaviour is obvious in the case of all 10 countries in the region, where the poll was conducted.
"We are noticing an overall decline in the use of savings products. People have no patience any more and are resorting to loans, and Romania is among the markets witnessing the strongest demand for consumer loans," comments Andrea Moneta, a member of BA CA board. Implicitly, the rapid growth of consumer lending and of retail overall has its risks, as in most cases there are new customers and banks do not know who is involved.
"Big gains also mean higher risks. For the consumer lending market, it is important to build a relationship with customers who are interested in becoming loyal, and the first step is transferring salaries into bank accounts," says Moneta.
In 2005, 15% of Romanians had contracted a consumer loan, compared with a penetration rate of 15% in Poland. In the case of both countries, the volume of customers who contracted a mortgage stayed at a low level of 1%.
Overall, the dynamics of the Romanian lending market is among the most spectacular in the region: while in 2001 only 3% of Romanians had a loan, the volume has surged to 16% four years later. However, the low figures the BA CA survey reveals are pointing towards a potential expansion of the lending market. There are almost 9 million Romanians that do not have accounts with the 40 banks operating at present, though salaries are on a visibly upward trend, which increases the degree of eligibility for starting working with a bank. As of late, decisions by an increasing number of companies to pay salaries into bank accounts, has initiated the banks'' contact with new customers, and has been a factor in the growth of the banking industry.
Despite the rapid growth, the banking market has witnessed over recent years, less than 50% of Romania''s population aged above 15 has a stable relationship with a bank, compared with 34% in 2001, shows the same survey by BA CA.
Romanian lending market
* Is witnessing one of the strongest demands for consumer loans in Central and Eastern Europe
* In 2005, 15% of Romanians had contracted a consumer loan
* The dynamic of the lending market is among one of the most spectacular in the region
* While in 2001, 3% of Romanians had a loan, the volume has risen to 16% four years later
* Has a solid growth potential, as 9 million Romanians do not have accounts with banks.
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