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BRD continues to raise credit interest rates

BRD continues to raise credit interest rates
30.03.2009, 16:56 11


                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     BRD Groupe Société Générale, the second largest bank on the Romanian market, continues its strategy of making lending more expensive, which it started last year, justifying this through the need to cover higher financing costs, although the main effect of the agreement with the IMF should have been a reduction in credit interest rates. The BRD anticipates the rise in average interest rates on loans to amount to 1%, from 10.8%, to 11.8%, in order to compensate for the increase in the average cost of financing, from 5.6% to 6.8%, according to the 2009 budget, which will be debated in the General Meeting of Shareholders in April. In this way, the bank is attempting to maintain its interest rate spread - the difference between interest rates operated for credits and interest rates paid for deposits and other sources of financing, after last year saw it decline by around 0.6%. "We intend to compensate for the rise in the cost of resources by increasing the rate of absorption via credit interest rates," reveals the BRD's draft budget.
The expected rise for credit interest rates comes after Romania sealed a financing agreement with the IMF, whose main effect should be a reduction in banking interest rates and resumption of lending in the economy.


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