Bankers managed to post a 100 million-euro net profit in thefirst quarter of the year even though the economy is most likelystill in recession, precisely because of the lack of funding, whichblocked consumption and left companies without clients.
Non-government loans have been on an uninterrupted slide for agood few months, but banks boost their revenues by increasing thespreads - i.e. they are much slower to cut credit interest ratesthan deposit interest rates. Bankers thus take advantage of thefact that they have sufficient liquidity and are not pressured tofight over clients' money, and are not forced to cut interest rateson loans, because competition is limited by the much stricterlending criteria. Basically, many clients are so indebted atpresent that they could not get a fresh loan to refinance theirdebt, even if the interest rate were much lower.
"The profit in the banking system was significant, around 100million euros. It is a sign banking activity has resumed.Provisions remained on the rise, but the operating incomesuccessfully overcame the financial loss. Loans started to pick up,and banking activity has resumed on several segments," NicolaeCinteza, head of the central bank's supervisory department, wasquoted as saying by Mediafax news agency.
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