Bankers keep interest rate pressure on existing clients

Banks are cutting interest rates on new loans, and even
organise promotions, while existing clients continue to bear the
burden of high interest rates, while bankers hope to cover bad-loan
losses. Interest rates on new RON-denominated loans for the
population fell by two and a half percentage points in April, to an
average 11.9% a year, with bankers making the biggest cost cuts for
consumer loans, for which promotional offers returned this spring
after portfolios fell by 5 billion RON (1.2 billion euros) over the
last 14 months, reveal data from the NBR (National Bank of
Romania).
The retail segment spread between the average interest rate on
new loans and on new deposits fell to 4.1% at the end of April,
from 6.1% in the previous month. Although interest rates on
existing loans are dwindling, bankers continued to boost the spread
– a major source of revenue, which reached 8.36% in April.
Analysts say banks are not necessarily seeking a rapid
resumption of lending by cutting interest rates, but they have
merely adjusted to the new market conditions, following the
relaxation of the NBR’s monetary policy.