Their main targets are the customers with a good credit history and those whose pay is deposited in an account.
CEC Bank, the only major bank that is still state-owned, is selling leu loans at an annual percentage rate of 9.2% until the end of May, having temporarily waived loan application processing and management fees. A customer taking out a 25,000 lei (about EUR5,600) loan for five years will have to pay about RON520 per month.
“There is a quite clear loan interest decline trend. Banks are going from one promotional campaign to another. It’s a fierce competition out there,” said Bogdan Spuza, marketing and retail segments manager with BRD, the second leading bank in the country.
“Interest rate is on par with the neighboring countries or even lower. Personal loans come with rather high costs and higher risk than mortgage loans.”
BCR and BRD, the two largest banks in Romania, are charging about 10% annual percentage rates from those customers who keep their salary accounts with them, while standard clients pay about one percentage point higher rates. No loan with an annual percentage rate of more than 14% would make it into the ten best loan offers on the market.
Even though loan interest rates have visibly dropped in the last few years, bankers also cut deposit interests, which are now 2% to 3% a year, so their margin remains high. Leu deposits carried a 15% interest in 2009, for instance. Moreover, banks are now able to borrow at merely 3% per annum from the money market.
The high margin is what convinced bankers to resume promotional campaigns for consumer loans. Consumer loan stock is now down to RON53 billion from the RON76 billion peak of 2009, while the number of credit accounts is down to 3 million from almost 5 million at the onset of the crisis. (EUR1=RON4.4793)
(English version by Loredana Fratila-Cristescu)