Do BQK's reasons for raising interest in credit stand, experts speak

The Kosovo Central Bank (BQK) for the first time is probably being shown and is trying to make the obedient “” urgently charge the European Central Bank (BQE) now, when, still, without publicly and publicly spreading BEC warnings of raising credit rates, the driver warned you of increasing interest rates in Kosovo as well. The BQK, the follow-up showed deaf “” to the permanent demands of clientele and international banking associations to cut and roughly equate bank interests with other countries, and stubbornly maintained interest rates for all types of higher credit in Europe.

Now, following the ECB's warning of rising credit interest rates, running furiously to warn rapid rise of credit tickets -- even so far too high -- for poor Kosovars. In these 23 years, since the establishment of the Kosovo banking system was launched, The BQK not only did it not only match the interest of European banks, but it stubbornly kept the interest in all commercial banks in the country at its highest rate for decades.

In the early post-war years, banks in Kosovo had applied interest in loans by up to 24-25 percent, then 15-16 percent and more was the interest quota for decades in Kosovo commercial banks, while even when they landed slightly 3-4 years ago, they still remained significantly higher in Europe.

Meanwhile, there are still cases among microfinanciar institutions operating in Kosovo with the admission of the CEC, which the interest continues to be up to 41 percent, which is, of course, the daggers beyond and higher than even of the Islamic guilty. And now, the CEC, without losing a moment's time, running and running in public and not making too much of a guess once again spread the obedience, servileity and transparent partiality to commercial banks' intentions to still increase interest rates.

In fact, commercial banks, which affect Kosovo (from a total of 11 Sosh, 9, are out of the country), however that for now they are in complete silence and that not one word has been heard about the BQK's warning of new interest rates soon, they have so far never lined up and left no case without demanding increased interest rates and prices of banking services.

In this way, to this day Kosovo continues to have the highest rates of inerts in Europe, if so, but also beyond, as well as the highest prices for banking services. And, as our country continues to be a champion at the level of high interest and energy prices of banking services, these days, the BQC, which is under the supervision of the country's banking system and the protection of Kosovars' interests, again warned a rapid increase in credit interest rates.

While the CEC's reasoning on this warning, not only for observers and connoisseurs and circumstances of banking developments turns out to be absurd, highly unstable, even cynical. That's how the CEC argues the warning demand for increased credit rates to “Financial Stability report” “... liquidity maintenance costs will be challenged by increasing global interest rates transmitted directly through financing from mother banks. The monetary policies of some central banks have only countered increasing inflation through increasing basic interest rates. The ECB has been reluctant to intervene and change monetary policy in the first half of 2022, largely as a consequence of the impact expected to have an increase in the cost of financing in some of the EU's (posal recession) economies and further weakening of the euro”.

According to the CEC “changes to interest rates in the ECB will indirectly affect the costs of keeping liquidity and funding costs in the country. Moreover, despite the high levels of liquidity at the sector level, the majority of banks have noted a decline in the liquidity report from last year, among which some with a more emphasisable drop”. Of course, these estimates of the CEC, which are quite disunitable, and especially for the decline of the liquidity of Kosovo banks in this year (is precisely known to raise net profits of each Kosovo commercial bank even compared to the same month of last year) in this period are direct warning to raise interest rates, as well as the best in Europe. The failure of the CEC's demand for new daggers is exposed when the huge profits of Kosovo commercial banks in all periods of the year (three months, six months, nine months, and annual), which are exclusively the result of very high prices up to bank services and still high incomes in commercial and unintelligible banks, even beyond illegal backlogers, microfinance institutions.

According to CEC data, commercial banks in Kosovo for the four months of this year have earned 44.6m euros. Meanwhile, connoisseurs of banking developments in the country estimate quite differently the BQK's claims that “against the sector-level high liquidity rate, most banks have noted a decline in the liquidity report from last year, among which some with a lower emphasis of”.

Albulen Kastrati, professor of economics, has told the Economic Bulletin that “the liquidity of commercial banks in Kosovo is relatively high and stable. According to the Regiment for the Risk Management of Lyquidity, the mandatory liquidity rate that each bank in Kosovo should hold is minimum 25%, while CEC data shows that this rate is currently 32% or above the minimum item”. Therefore, according to Kastrati, commercial banks, in a regulatory way, have room to reduce liquidity by using it for investments.

According to her, the decline in banking liquidity has occurred for these reasons: First, the rapid opening of the economy and economic growth of 7% in 2021 has increased commercial banks' optimism in credit returns capacity, so credit credit has increased rapidly. By June 2022 loans have marked the highest annual growth of 17.4%. Second, commercial banks in Kosovo have consistently accumulated excessive liquidity, which they have reoriented in investments in valuable papers (in country and abroad) and in deposits abroad.

In the past two years, part of this liquidity has been used for the release of a larger volume of credit.

Third, in 2022 the level of remittances may be lower than last year, so remittances can also play a role in the decline of banking liquidity. Albulen Kastrati responding to the economic Bulletin's question that “a is likely that in most of Kosovo's commercial banks, there is a decline in liquidity, in months or periods where net-to-finance <x1) profits are recorded, it has explained that banks in Kosovo have always had sufficient variety (exactly enough money), because more law, it is the only financial institutions that have the right to accept citizens' deposits.

Therefore, even if the interest rate in deposits drops to zero, banks will still have enough deposits, respectively, sufficient liquidity, because deposits must be circulated through banks.

The reduction of liquidity means banks' investments in new loans and other investments have increased.

Kastrat says that bacteria earn little or nothing in liquid assets (e.g. if they deposit them in other banks in Europe, they collect the main revenues from interest to credit. Hence, the use of liquid assets to increase loans released in the economy would naturally mean higher profits for banks, especially at such low levels of non-aligned loans.

Economics Professor Albulen Kastrati has been looking forward to explaining to the Economic Bulletin the CEC's rationale for rapidly increasing interest in credit.

According to her, out of 11 commercial banks in Kosovo 9 are foreign. Foreign bank banks dictate the business strategy of banks in Kosovo. Mother banks are mainly in Europe.

Currently, says the professor, mother banks in Europe are facing higher liquidity costs, respectively, because the European Central Bank has increased the rate of basic interest for Eurozone banks.

The growth of the basic rate underscores that commercial banks in Europe will also increase EUIBORI rates. EPIBORI is the interest rate with which banks in Europe lend loans to each other. Banks in Kosovo refer to EURBORI rates as if they were the basic (conferental patterns). Hence, the interest rate on credit is expected to increase with the growth of EURIBR.

However, interest rates on credit are expected to increase not only because the CEC has warned such growth, but that the inflation rate in Kosovo is currently double higher than the average interest rate on credit. This means that citizens are really paying negative interest rates on credit, which means they are winning while banks are losing. This situation applies to loans issued in past years, when the interest rate on credit is built by presuming inflation of about 2% (as it has been for nearly 20 years).

Whatever it is, even though it turns out that the CEC, this time again has not made public the real reasons for warning about a return of credit calls to us, increased rates of inerts will happen in our country as well. Thus, creditors were to prepare for the cost of new interest, of course on their budget back as well as poor. However, the new interest will add net to even more commercial banks and microfinance institutions installed in Kosovo.