Bankers make almost 100m-euro profit in Q1

Bankers managed to post a 100 million-euro net profit in the first quarter of the year even though the economy is most likely still in recession, precisely because of the lack of funding, which blocked consumption and left companies without clients.

Non-government loans have been on an uninterrupted slide for a good few months, but banks boost their revenues by increasing the spreads – i.e. they are much slower to cut credit interest rates than deposit interest rates. Bankers thus take advantage of the fact that they have sufficient liquidity and are not pressured to fight over clients’ money, and are not forced to cut interest rates on loans, because competition is limited by the much stricter lending criteria. Basically, many clients are so indebted at present that they could not get a fresh loan to refinance their debt, even if the interest rate were much lower.

“The profit in the banking system was significant, around 100 million euros. It is a sign banking activity has resumed. Provisions remained on the rise, but the operating income successfully overcame the financial loss. Loans started to pick up, and banking activity has resumed on several segments,” Nicolae Cinteza, head of the central bank’s supervisory department, was quoted as saying by Mediafax news agency.