BNR's Lazea: In 2022, the banking system posted a record profit for Romania.
The banking system posted a record profit for Romania in 2022, of RON 10.2 billion, that in 2023 "will be exceeded by far" also because in the first four months of 2023 banks widened the margin between the interest charged on loans and the interest paid on deposits, Chief Economist with the National Bank of Romania (BNR)Valentin Lazea said on Wednesday, told Agerpres.
"In 2022, the banking system posted a record profit for Romania, of RON 10.2 billion - over EUR 2 billion - that in 2023 will be exceeded by a lot. And how will it be exceeded? Among other things, because in the first four months of this year, the banks widened the margin between the interest charged on loans and the interest paid on deposits. In the first four months of 2023, BNR increased its monetary policy rate by 25 basis points, the commercial banks - I'm talking about the system as a whole - increased the interest rate charged on new loans denominated in RON by 41 basis points, but they lowered the interest rate paid on new RON deposits by 53 basis points. So, it's clearly, more profit results from this increased margin," Lazea told a Ziarul Bursa conference.
In his opinion, "this applied tactic" is not to anyone's benefit for at least three reasons, one of which is the fact that "monetary policy signals are not properly conveyed."
According to him, if the commercial banks fail to get BNR's signal on deposits and increase the interest rate to stimulate people to save more, BNR's message is "lost in nothingness."
"The second negative aspect is that the banks will say: yes, sir, we have no interest in stimulating the public to save anymore, because we have too much money. We have more deposits than loans and that is not our fault, because there are not enough bankable projects in Romania. And they are right to say that. However, people keep saving with banks in the first place. Deposits outperformed inflation in this last half of the year, and the public still goes to banks, which does not meet the desire of the banks to stop individuals from coming to the banks with money. People keep coming with money, only to accumulate frustration, because instead of increasing their remuneration, the remuneration that people receive decreases, which is completely absurd."
In his opinion, with a much increased profit compared to last year, banks will become, including in Romania, the pet peeve of politicians amid the 2024 election year.
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