T-bills no longer bring the big bucks

While placements in state bonds remained the most profitable investments by the beginning of this year, allowing banks to reap high revenues, this trend seems to be over.

The explanation is simple: the interest rates paid by the Finance Ministry to the banks have gradually decreased from one issue to another, sinking to the level of interest rates for the loans granted by commercial banks to their clients.

“Banks should have expected the decrease of the T-bills yield, especially since the signal had been launched previously. If we draw a comparison, it is not very profitable now to place the funds to the Finance Ministry for such interest rates. One should rather head toward loaning. In addition, there has been a sustained lobby to boost loaning lately,” an official of a foreign bank operating on the Romanian market stated.

While the average yield for 3-month maturing state bonds stood at 49.98% at the beginning of this year, the average interest fell to 42.98% and, according to specialists, it is likely to go down to 38-39%.

Banks are currently loaning at 40-46% interest rate for domestic currency denominated credits and at 13-15% interest rate for hard currency denominated credits.

“It is quite likely for the T-bills interest rates to increase, especially because the market “takes a break” over the summer. However, I think that it should stop at the level of 38-39%, as the banks are not willing to lend the state below this level,” Nicolaie Hoanta, vice president of Banca Carpatica, said.

Commercial banks used to make a lot of money from state bonds placements, without needing to strive to diversify the range of money placements. As an old saying goes, any wonder only lasts three days (years, i.e.).

State bonds ceased to be the best placement for the population as well, since they have been gradually replaced by banking deposits.

Besides, Finance Ministry officials have announced that the interest rate for the population’s placements would stand at 35%, against 44% at the beginning of the year.