For the fourth consecutive month in October, bankers rose lending costs for both households and companies, in an attempt to increase their interest-derived income at a time when risk provision spending continues to be high.
The average interest on leu-denominated individual loans reached 12.8% a year in October, up nearly a percentage point against the end of June. For corporate loans, the average interest on leu-denominated loans returned above 10% a year for the first time in seven months.
“The interest rate growth trend was inevitable. I don’t think we can count on interests to decline in the coming period because things are quite complicated, including at European level. Banks have several obligations and one of the things they have to do is increase their capital,” comments financial analyst Aurelian Dochia.
The increase of loan interest rates owes exclusively to the higher margins applied by banks above their own financing costs, considering that the Robor indicator (the average interest rate at which the largest banks on the Romanian market borrow from one another) did not record major fluctuations in October.
Deposit interest rates remained relatively steady, so bankers increased their profit margins by up to one percent. The net interest margin on the individual segment has climbed by more than one percent since June, to 6.3 percent. In June the margin was 5.3 percent.
For companies, the net interest margin for amounts in lei climbed by more than 0.6 percent in the last four months, to 4.5 percent.
The central bank cut its monetary policy interest by one percent in November, to 6% a year, but analysts say the move is not enough to generate a cheapening of lending.
“Half the loans are in euros and many of the large transactions are conducted in euros. So the instruments of the central bank are less effective,” Dochia adds.
As far as euro interest rates are concerned, bankers kept them the same until September both on loans and on deposits. But October came with a change of trend, with interests on euro deposits up by 0.65% for companies and by 0.2% for individuals. The trend was not reflected in the cost of loans.
The increase in deposit interests comes at a time when bankers are tightening the fight over clients’ foreign currency savings in order to compensate for the loss of support from parent banks.
Some banks have come to pay interests of up to 5% a year on deposits in euros. The cost of loans could pursue the same trend considering that the net interest margin has already narrowed to around 2.5 percent.
(English version by Daniela Stoican)