Bankers reluctant to lower profit margins

Bankers’ messages of intensifying their battle to attract clients are still very little reflected in interest margins – the spreads between interests charged by banks on loans and those paid by clients on deposits.

In March the narrowing of margins was more apparent for lei-denominated interests, with the spread falling by almost half a percentage point for individuals and by more than one percentage point for companies. The adjustment however comes after a significant leap in February. The progression was similar for foreign-currency interests.

The cheapening of loans has been constantly accompanied by cuts to deposit interests, so the spread has been almost steady in the past year. A visible correction was made as late as in December last year, but since then bankers have made little concessions.

For lei-denominated loans for individuals, the average interest fell by a little over one percentage point in March, to 12.95% a year. During the same period, the deposit interest rate fluctuated very little, nearing 7% a year, which saw the margin narrow by around half a percentage point.

Bankers only to “tested” the market with promotional credit offers, and are set to make a decision on whether to pursue a policy of cutting interests based on the demand response.