Bankers helplessly watch credit/deposit spreads shrink

The spread of interest rates between credits granted to the population and deposits continued to drop in June, and reached an all-time low, amid tightened competition from banks on deposits. While in January the interest rate margin for RON stood at 5.5 percentage points, in June the margin went down to just 3.26 points, amid an accelerated decline in interest rates for deposits in RON. The euro interest rate margin was also down from 3.9 points in January, to 3.17 points, according to data from the NBR (National Bank of Romania). The difference in interest rates between new credits and new deposits shrank from one month to another, and was down 40% in RON and 18% in euros, halfway through the year, against January levels. Therefore, the margin between interest rates paid to the population for deposits, and interest rates charged for credits, fell to the lowest level seen over the last few years. Credits granted to the population amounted to a volume of almost 87 billion RON (around 24 billion euros) in June, which accounted for 48% of funding granted by banks to the private sector.