Nominal reduction in Romanian bank deposits observed during first half of the year, as forex savings become increasingly popular.
In June 2025, Romanian banks witnessed a significant shift towards foreign currency deposits, with the stock of such deposits reaching RON 205.5 billion, a 18.5% annual growth rate according to data published by the National Bank of Romania (BNR).
This trend is primarily driven by heightened economic and political uncertainty, persistent inflation above target, and pressures on the local currency linked to current account deficits and capital outflows. The environment makes foreign currency deposits more attractive for both depositors seeking to preserve value and banks managing currency risks.
The shift has implications for the local currency loans and bank loans to the private sector. With the annual growth rate of local currency loans standing at 10.0% at the end of June 2025, the increased cost and risk of lending in the domestic currency could lead to potential credit tightening.
The majority of foreign currency loans, amounting to RON 115.7 billion, were extended to companies and non-monetary financial institutions in June 2025. This shift towards foreign currency lending creates currency mismatch risks on bank balance sheets, as borrowers may earn income in local currency but owe in foreign currency, increasing the potential for defaults if the leu weakens further.
Despite the surge in foreign currency deposits, the total stock of deposits in Romanian banks decreased to RON 629.2 billion at the end of June 2025. Meanwhile, the stock of bank loans expressed in local currency increased by RON 3.2 billion, with an annual growth rate of 10.0%. Loans denominated in local currency accounted for nearly 70% of the total bank loans to the private sector at the end of June 2025.
The growth in forex lending was slightly higher than that of local currency lending, with the annual growth rate for loans denominated in foreign currency standing at 7% y/y at the end of June 2025, a significant acceleration from 3.3% y/y at the end of December 2024.
A fifth (0.3%) of the increase in the stock of foreign-denominated loans in June 2025 was due to the appreciation of the euro against the local currency. The stock of local currency deposits decreased to RON 423.6 billion at the end of June 2025.
The shift towards foreign currency deposits reflects responses to economic uncertainty, inflation, fiscal pressures, and a weaker external position. This scenario affects local currency credit by increasing risk and cost, likely constraining bank lending to the private sector and potentially impacting economic growth and financial stability. Restoring confidence via credible fiscal consolidation and monetary stability is crucial to reverse the trend, stabilize the leu, and support sustainable credit growth in local currency.
Sources:
- The Financial Times
- The Wall Street Journal
- Reuters
- The surge in foreign currency deposits signals a change in the business landscape, as banks within the industry increasingly appeal to clients seeking to safeguard value amid economic and political uncertainty.
- The increased attractiveness of foreign currency deposits and loans in the banking-and-insurance sector, fueled by inflation and currency risks, could lead to potential credit tightening for the private sector, impacting both local businesses and overall economic growth.
