BRD: NBR decisions show in loan costs

BRD-SocGen, the second biggest bank in the system, has recently raised the interest rate for the RON-denominated Expresson Lejer personal loan by two percentage points to 12.9% per year.
“NBR’s recent steps – the raising of the monetary policy interest rate and especially the 25% increase of the rate of minimal compulsory reserves for RON, are also translating into more expensive loans. As far as we are concerned, this increase is limited,” Sorin Mihai Popa, deputy general manager with BRD-SocGen, told ZF.
In late June, the central bank decided to increase the benchmark interest rate by a quarter of a percentage point, to 8.75% per annum and raise the rate of minimum compulsory reserves in RON by four percentage points to 20%, in order to contain the unsustainable growth in RON-denominated financing.
Under the new interest rate terms, the monthly instalment for a 10,000 RON loan contracted over five years stands at 227 RON, approximately 9% higher compared with the 10.9% interest per year. The effective annual interest under these terms amounts to 17.1% per annum.
The good news for older customers is that the interest increase does not apply to loans already granted.
In the context of the overall interest decline registered over the past years, banks have often “forgotten” to adjust the costs of already granted loans, and as a result customers have paid higher rates while the new products have been sold at lower prices.
BRD-SocGen has not modified, at least so far, the interest rates for other loans or for resources drawn from customers. For mortgage credits granted for long terms, the bank uses an interest that is calculated depending on an external indicator. In the case of RON-denominated products, the indicator is the three-month BUBOR, to which a fixed margin is added. Since late June, this indicator has advanced by 0.3%.
BCR, the biggest bank in the system, has not operated any interest rate modifications so far.
Raiffeisen, the number three on the market is not planning interest raises, at least no any time soon.
The divergent evolutions are reflecting the players’ different expectations related to monetary conditions. On the other hand, this shows that, under the pressure of tight competition, banks are much warier when it comes to making loans more expensive.