Interest rates continued to grow, lending slightly decreased

Interest rates on loans from Montenegrin banks continued their upward trend, while the volume of lending was ten percent lower in six months of this year compared to the same period last year, according to data from the Central Bank relating to June.

The average weighted effective interest rate of banks (interest rate on a loan with all costs) was 6,34 percent in June, which is the highest level since 2018.

That average interest rate on newly approved loans in June was 6,26 percent and it shows a slight upward trend, as it was 5,49 percent in the same month last year.

In six months last year, banks approved loans with a total value of 710 million euros, and in the same period this year, this figure is 642 million euros. This drop of around 68 million euros refers to a decrease in lending to citizens by around 20 million to 265, and to legal entities by 48 to 377 million.

The growth of interest rates for newly approved loans for this period is expected, because EURIBOR (the reference interest rate determined on the European interbank market) in June of last year was around 0,25 percent, while in June of this year it was worth 3,8 percent. The growth of EURIBOR particularly affected loans with a variable interest rate, the installment of which could increase by 25 to 30 percent.

The effective interest rate on newly approved loans for liquidity and working capital increased from 4,75 in June last year to the current 5,16 percent, for the refinancing of liabilities it increased from 7,13 to 8,38 percent, for the acquisition of fixed assets from 3,98. 4,85 to 8,39 percent, for non-purpose cash loans from 9,47 to 6,54 percent, for car purchases from 8,84 to XNUMX percent,...

From June 2022, the average interest rate for housing loans increased from 4,78 to 6,23 percent, for education from 11,01 to 11,03, and for non-purpose mortgages from 5,4 to 7,14 percent. In other words, interest rates on newly approved loans for all purposes increased.

In June of this year, banks approved a total of 146 million euros, which is five million more than in the same month last year. To maintain liquidity and working capital, they approved loans in the amount of 46,7 million euros, while in the same month last year they were worth 62,5 million euros.

Loans for the purchase of fixed assets increased from 4,8 million to 28,4 million. Non-purpose cash loans were reduced from 28,5 to 27,5 million, while the approved amount for housing loans increased from 9,6 to 10,3 million euros. Lending for investment projects increased from EUR 14 to EUR 15,6 million, while refinancing liabilities decreased from EUR 8,1 to EUR 5,2 million.

Interest on loans is many times higher than on savings

With the increase in interest rates on loans, according to official data, the average passive - interest rates on deposits and savings did not increase at the same time, but they are even in decline. The average interest rate on savings and deposits was 0,3 percent in June last year, and 0,28 percent in the same month of this year.

Thus, the average weighted effective interest rate of banks on loans (6,34 percent) was 22,5 times higher than the average weighted effective interest rate of banks on savings - 0,28 percent.

In June, the interest rate on demand deposits of natural persons was 0,03 percent, and the highest was on deposits - savings, which are fixed for a period of three to five years.

This shows that the banks are very liquid, that is, they have enough money and that most of them do not need new deposits.

Total deposits in banks at the end of June were at a record level of 5,27 billion, while the total amount of approved loans was worth 3,98 billion. That is, total deposits are 1,3 billion more than total approved loans.