Interest rates on deposits fall by 50%

Bankers have cut interest rates on RON deposits faster than credit interest rates because the level of liquidity has improved on the market and because they need higher profit margins to cover losses generated by non-performing loans.

Some banks saw interests on deposits in RON almost halve compared with February 2009, whilst interest rates on new loans in the Romanian currency fell by just 25% last year on the market as a whole, according to data from the NBR (National Bank of Romania).

In February last year interest rates on deposits had climbed towards 16% a year amid competition among banks over liquidity. The lowest interest rates on deposits have now fallen towards 6% a year, whilst most offers are in the region of 8% a year. Last week saw the last few offers move from double to single-digit interest rates.

Small banks used to be the most aggressive players on the savings segment. For instance Portuguese-held Millennium Bank offered an interest rate of 16% per year for 9-month and one-year deposits. Now, for the same products, interest rates amount to 7.75% a year.