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Bankers keep interest rate pressure on existing clients

"Banks are cutting interest rates on new loans, and even organise promotions, while existing clients continue to bear the burden of high interest rates, while bankers hope to cover bad-loan losses. Interest rates on new RON-denominated loans for the population fell by two and a half percentage points in April, to an average 11.9% a year, with bankers making the biggest cost cuts for consumer loans, for which promotional offers returned this spring after portfolios fell by 5 billion RON (1.2 billion euros) over the last 14 months, reveal data from the NBR (National Bank of Romania). The retail segment spread between the average interest rate on new loans and on new deposits fell to 4.1% at the end of April, from 6.1% in the previous month. Although interest rates on existing loans are dwindling, bankers continued to boost the spread - a major source of revenue, which reached 8.36% in April. Analysts say banks are not necessarily seeking a rapid resumption of lending by cutting interest rates, but they have merely adjusted to the new market conditions, following the relaxation of the NBR's monetary policy." writen by Ciprian Botea