Romanian banks derive EUR 1.6 bln net interest in H1

Net interest income, the most important profit resource of local banks, continued to grow in the first half of this year, by 4.2%, to over RON 7.7 billion (EUR 1.59 bln), according to the data transmitted by Romania's National Bank (BNR) to Ziarul Financiar daily.

Lending increased at an average rate of almost 6% in the same period.

Interest revenues have increased over time due to higher interest margins. As the interest rates have declined, banks have kept interest rates for loans rather high while cutting the interest rates for deposits.

In H1, the banks charged interest on their portfolio of loans worth RON 9.67 bln (EUR 2 bln), up 5.4% from the same period last year.

Notably, the performance was achieved under the circumstance that some bank debtors were allowed to defer their installments to banks. This results in an average annualized effective loan interest rate of 7.2%, considering the RON 270 bln (EUR 55.9 bln) portfolio of loans (foreign and local currency altogether).

On the other hand, banks' interest expenses paid to customers for deposits amounted to only RON 1.96 bln (EUR 405 mln), increasing by 10.5% year-on-year (a strong rise explained by the low base).

The average annualized effective deposit interest rate in the first half of the year was, despite the double-digit rate rise, only 1% considering the RON 380 bln (EUR 78.6 bln) stock of deposits (foreign and domestic currency).

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