Banks continue to increase interest spreads
The spread between RON-denominated interest rates on the
individual clients' existing loans and deposits continued to climb
by half a percentage point in the first quarter of the year, to
8.14%, with bankers seeking to cover their costs over the period
during which they are not granting new loans, reveal data of the
NBR (National Bank of Romania). The interest rate margin remains at
over 5% for RON-denominated loans and deposits.
Under the circumstances, the number of loan applicants has nearly
halved compared with the 2008 peak, with the only segments still
afloat being credit cards and mortgage loans.
Bankers are keeping spreads up in order to have better cost
coverage, with operating costs falling to 56.7% of revenues in
March, compared with 60.7% in December, and a little lower than the
level of the similar period of last year. The reduced weight of
operating costs also comes amid the around 4,000 redundancies made
in the banking system in the past year, and the closure of tens of
branches.
Interests on existing loans fell by half a percentage point in the
first three months of the year, while deposit interest rates fell
by over a percentage point.