BQC hands over to banks, they raised expensive revenues without informing citizens

Based on Kosovo Central Bank data - The CEC, commercial banks in Kosovo closed the year 2022 with a profit of nearly 150m euros. Credit interest increased in 2023. Kosovo's citizens have not been reported. The state, which has intervened in the prices of oil derivatives, setting a ceiling price, is shown powerless in front of banks.

BQK has admitted to increasing interest rates, but has confirmed that it cannot control this growth.

“More details on this issue, please address the Kosovo Banks Association. As we have announced earlier, the Central Bank of the Republic of Kosovo does not have monetary policy competencies, so interest rates are determined by global dynamics in interest rates, as well as by numerous other factors in the domestic market”, the CEC's response to Periscope.

From this institution, they have said that for existing loans, most of which are fixed rates, there is no change of cost/interest/catti; already for loans with variable interest rates, it can change interest rates, depending on changing the reference rate, mainly Eurybor.

In cases where the CEC states that a financial institution acts in opposition to the activity for which it is licensed by the CEC, action and administrative measures are taken, in line with the legislation in force”, they have said further by the CEC.

Periscop has numbered dozens of citizens who grew interest but were not reported by banks.

In the BQK, they have said that: “for any change, banks are tasked with announcing the client in advance”.

Based on BEC reports in January 2023, there has been an increase in new loans.

The credit rate, in January 2023, rose from 6.3 to 6.6.

The weighted average of credit rates was 6.3 percent in December 2022. For family economies 5.9, of which consumption 6.4, mortgage 5.1 percent.

Periscope has failed to receive an official response from the Kosovo Banks Association, as this institution has not wanted to answer any of the questions posed concerning the increase in interest.

While in the CEC have said that for existing loans, most of which are fixed rates, it does not change costs/interest/catti; meanwhile for loans with variable interest rates, it can change interest rates, depending on changing the reference rate, mainly Eurybort.

According to bank regulations, when the mortgage is taken, the bank is providing loans with fixed rates, or variable rates that cannot be controlled by the bank. Banks issue the loan, offering part of fixed interest and part of variable interest. The order of the Hippocute Credits doesn't anticipate that. So banks can lend mortgages with fixed or variable rates, but not both. Banks in Kosovo appear to be using the variable rate only to increase interest, not even to reduce. This, after Eurybor was transformed with interest according to his own will and not according to the regulations of the Central European Bank- ECB. So they offer fixed interest plus Euribor to be the minimum zero. They don't know the negative value. So their formula is fixed interest plus Euribor. But, Eurybor They don't count on it if it's of negative value. And Eurybor was of negative value for several years, for which citizens were not compensated by the bank. If the dagger was 4 percent plus euribor -0.5 percent, then the dagger would have to sit at 3.5. Now, when its value is above zero, they are applying it by running thousands of euros.

What is Eurybor?

Note: E URIBOR is the Euro Interbank Offered Rate February and refers to the interest rate based on the offer and demand of money on the European market, as well as based on daily quotas, submitted by the 47 biggest European banks. When clients receive loans with the variable interest rate related to Euribor, they should take into account the possible changes in Euribor, which banks in Kosovo apply every six months for the duration of the loan.

But before he talks about Eurybor, we need to understand an important point. What's the kind of interbank offer? The answer is relatively simple. Eurbor it has the functionality of being able to tax loans made by banking institutions, clarifying that they are loans made between them.

The reason why it is necessary for banks to lend money to each other is to be able to ensure that at any time there are insolvency of the interbank system. In this way, there must be a means to control and account for what interest to repay loans. It should be emphasized that in addition to the fact that interest must be paid, a sum called risk priority should be covered.

But where do you get the money the bank borrowed to pay the interest? The answer is by the final users of the money mentioned, that we are the people seeking loans from the bank, above all, is important for those seeking mortgage loans.

So that the bank will be sure that it will have the payment capacity to be able to cover the expenses caused by the loan demanded by another bank, it makes the account of the mortgage interest rate based on Euribor. It thus calculates the rate by applying Euribor in six months or in other cases in a year.

EXAMPLE: A loan may have the condition of the variable rate defined in this way: The fixed rate of 4% + Eurybor 6M ( determined according to the last June and December of each year). But not below the rate of 3.80%. So we say the initial credit rate was 4.2%. After 6 months, a review of Eurybor 6M's rate in financial markets is identified as the rate of Eurybor 6M on the 30.06. has been +0.5%. In this case, the credit rate exceeds 4.5% credit (4% + 0.5%) for the next 6 months. And at this rate, the interest that should be paid for those months is required. Besides, on 31.12. We see that the rate of Eurbor 6M has gone to -0.1.5%. The same logic, for the next 6 months, calculating the interest applied in the rest of the loan will be estimated at 3.85% (4% + (-0.15%) rate.

Our commercial banks, for loans with variable rates, always make sure that they set a floor rate (most likely low), but they don't usually set a ceiling rate. In this case, they protect their own interests - but not those of their client. Unless the client is consciously seeking from the commercial bank to include the ceiling rate in the loan contract.

Banks up profits

Each bank in Kosovo has achieved huge profits in the past year. Total net bank profits amount to 136m euros.

Based on the report, which has not yet been published by the Central Bank of Kosovo (BQK), the bank's main profits come from interest. Kosovars have paid banks interest for the last year to a total of 262.7m euros. Meanwhile, banks have paid only 26m euros, or ten times less. So, BQK has allowed banks to make a gross profit from interest to 993 percent.

Most Kosovars have paid Raiffeisen the Bank (RZB) -- a total of 54.7m euros -- while RZB has paid the interest only 2.18m euros or over 95 percent less. This has provided this bank with a clean profit of 27m euros.

Banks have secured revenues from tariffs and 90m euros per year, while spending only 35.4m euros. The CEC has allowed banks to make gross profits in this 254 per cent category.

Banks in 2022 have had total revenues of 306.5m euros, while expenses of 170m euros. So net profit, after lowering all expenses and taxes, is 44.5 percent.

Over 5.5 billion euros have reached the overall amount of Kosovars' deposits in the country's banking sector.

According to the Central Bank of Kosovo, of this total of 3.6 billion euros are household deposits, while around 2 billion euros are corporate deposits.

For this many billion, commercial banks pay depositors an annual interest rate of 1.8%.

On the other hand, the total amount of loans approved by banks in January 2023 has reached over 4.3 billion euros. Of interest rates and services commercial banks in Kosovo only in the month of this year have gained nothing less than 13.4m euros in net. /Periscopi/