Major banks managed to improve their net interest income in thefirst nine months of this year despite the tight competition on thesegment of deposits.
BCR and BRD, the biggest two domestic banks, in the first ninemonths of the year posted 20% higher net interest income in RONcompared with the similar period of last year. In the case of BancaTransilvania, another top player, the income climbed by 17%.
Thus, despite the fight for deposits, keeping paid interest ratesat high levels, and the signals regarding loans becoming cheaper,banks have managed to add to their incomes over the year.
Mugur Isarescu, NBR governor, himself harshly criticised bankersfor keeping interest rates for RON at too high levels in November,showing interest rates should not exceed by more than 3 percentagepoints NBR's benchmark interest rate. This would mean interestrates should stand at 11% per year at the highest, but theycurrently start from 13% per year and can even top 20% for consumerloans, which are viewed as riskier.
On the other hand, bankers say loan default risks have gone up amidthe economic downturn and risk costs must be reflected inprices.
The NBR itself is closely watching how much operating profit bankscan generate, considering they also need to cover the significantprovision expenses now. Should a bank not have enough operatingincome to cover provision expenses and make a net profit, as well,it needs to boost its capital to maintain its solvency.
Among large banks, Raiffeisen is the exception, having posted adrop of around 18% in net interest income.
Except Bancpost, all top ten banks reported profit (at least inline with IFRS, which have a milder treatment regarding provisionsthan domestic accounting standards). However, net profits arevisibly smaller than in the same period of 2008.
According to NBR data, domestic banks in the first nine months ofthis year derived net profit worth 680m RON (160m euros), fivetimes lower than in the same period of 2008.
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