Why has the interest of Romanian banks in funding agriculture increased?
Codrut Nicolau, Patria Bank: "The bankers are interested in funding growing sectors and agriculture is a growing sector."Funding agriculture has become increasingly attractive for the banks in Romania, in a context of agriculture business increase", says Codruţ Nicolau, Deputy Director-General at Patria Bank - business division.
Agriculture has seen the biggest advance during this last year regarding lending between all the sectors of the economy, of approximately 10%, which has led to an increase of the funding balance from 14 billion RON in July 2017 to more than 15 billion RON in July 2018, according to the NBR data (National Bank of Romania).
„Generally, the bankers are interested in funding growing sectors and agriculture is a growing sector." (...) It's been three years since Patria has a special agriculture division, which is rapidly growing. Why is it growing? On one hand, we are financing more and more often EU funding projects and on the other hand, we have very many partnerships with agricultural equipment manufacturers and dealers, by means of which, we are financing the end customers", Codrut Nicolau said, Deputy Director-General at Patria Bank - business division.
In spite of the important lending increase in agriculture, the business in this field have only managed to raise 4,1% of the overall funding granted by the banks. For Patria Bank though, the loans granted to the farmers cover 30% of the overall loans granted.
"About 30% of the overall loan sales are in the agriculture area. The amount reaches 31.5 million euros in the first half of 2018. We expect these sales to increase in the second half of the year", the representatives of Patria Bank say.
Although the banks' interest in financing agriculture has increased, the Romanian farmers invoke considerable differences regarding the cost of financing in Romania versus other European countries, the foreigners benefiting from more advantageous interest rates.
"The interest rates for a large company, an urban one, in Romania, are still higher than the interest rates for a large company, an urban one, in England or Germany. Most often, it is related to the financing cost a bank has to pay in a small country and to the country risk", the Deputy Director-General of Patria Bank - business division - said.
The positioning of the agricultural sector at the top of the economic sectors according to the lending advance is not surprising, during the last two years, agriculture being the field where bank exposure increase has been the fastest one. The fast increase of agriculture financing as compared to other sectors is explained also by the small volume it started from.
Patria Bank, a bank that resulted from the merger of Banca Comerciala Carpatica and Patria Bank, wants to return to profit in 2018, while for the next four years, it aims at reaching a 2% market share, by means of the organic growth and also by means of potential procurement.
Patria Bank has reported for 2017 a net loss of 42 million RON, while the overall operational revenue has been 142.5 million RON, with a 30% drop as compared to 2016 due to the revenue decrease within the government bond portfolio, to the loan portfolio adjustments of Banca Comerciala Carpatica and to the agency network cut by 27 units.
Patria Bank has 771 million euro assets and a network consisting of 85 territorial units and more than 180.000 clients.
Source: ZFCorporate.ro
