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Interest on loans and deposits returns to 2006 levels

Interest rates charged by banks on loans and deposits are currently following a rising trend, and interest on RON-denominated loans might exceed the 15-percent-per-annum mark in late 2008, which would be similar to the interest charged two years ago.

Romanian commercial banks are currently charging interest rates on euro-denominated loans that are similar to the one in the developed market, of between 8 and 12 percent per annum, but the toughening of the international credit requirements is putting pressure on loan costs. Chairman of the Association of Chartered Financial Analysts Dragos Cabat told daily Business Standard on Friday that the interest on personal loans might go up to 15 percent following the decision of the National Bank of Romania (BNR) to increase its monetary policy rate. In the context of losses reported by international financial institutions, Romanian banks are following a strategy that is aimed at cutting risks and increasing sureties. The rise in interest rates on mortgage loans is expected to be lower than the rise in the interest charged on personal loans. Cabat also says the mortgage loans will be this year's favourites, as interest charged on them is currently standing at between 7 and 12 percent per annum, when euro denominated, and at 9-13 percent when RON denominated. He explains that the boost in Romanians' appetite for mortgage loans as a result of low interest might change what he calls an atypical situation in Romania, where over 80 percent of the loans granted to individuals is made up of consumer loans, while in Europe's developed countries mortgage loans make up some 75 percent of the total loans granted. The banks are also starting to increase interest paid on deposits. Raiffeisen Bank, for instance, has announced it is paying interest rates of up to 10 percent per annum on three-month deposits, depending on the size of deposits. The offer stands for new deposits. Sursa: http://www.rompress.ro

Tags: loans interest percent deposits bnr euro