Markets, businesses and consumers have been waiting for months for a signal from the major central banks that the policy of high interest rates – which they have adopted with the aim of taming inflation – will come to an end. The ECB has signaled a possible reduction from the second half of the year, while the US Federal Bank (FED) has been continuously kicking the can down since the beginning of the year, since inflation on the other side of the Atlantic does not say to subside, despite the 22-year highs that US interest rates are at.

The Greek paradox

In this environment, where borrowers remain desperate as they anxiously await to see their loan installments reduced, and while interest rates remain stable, Greek banks have managed to expand even more their interest rate spread. And this, despite the interventions and pressures from the government.

The official figures come from the Bank of Greece, which announced that for March the weighted average interest rate of new deposits remained unchanged at 0.53%, while the corresponding interest rate on new loans increased to 6.24%, widening the deposit-lending spread to 5.71%, from 5.24% in February.

It should be noted that the above-mentioned figures concern the weighted average interest ratesas shown in the table the interest rate on new deposits starts from 0.03% and reaches up to 1.77% for households, while the interest rate on consumer loans reaches up to 15.18%.

There is a big gap in terms of both existing deposits and existing loans. Again for March, the weighted average rate of total outstanding deposits remained unchanged unchanged at 0.54%, while the corresponding interest rate on loans remained almost unchanged at 6.32%. In other words, the interest spread between existing deposits and loans remained almost unchanged at 5.78%.

High profits for banks – Depositors missed the train

In this environment of high interest rates the four Greek systemic banks announced for 2023 profits of 3.6 billion euroswhile it is estimated that they will give to their shareholders dividend totaling 840 million euros (each bank will follow a different dividend policy and will distribute from 10% to 30% of its 2023 profits).

So while the banks are rewarding their shareholders for their trust and patience (shareholders have seen a dividend for 15 years), the same is not the case with depositors who have now lost their chance. And that’s why they shake the scarf in the period of high interest rates with… reward, for their support and trust in the banks, which starts just above absolute zero.

The interest rates in the rest of the Eurozone countries

But what is happening in the rest of the countries of the euro area? Based on official data, the weighted average interest rate on new business loans rose in the euro area by 4 basis points in March and formed, at 5.18%while for new loans to households for the purchase of housing the interest rate decreased by 5 basis pointsat 3.80%.

The weighted average interest rate for new business deposits with a fixed term rose 5 basis points in March to 3.68%, while the weighted average rate for household deposits with a fixed term was unchanged at 3.16% and overnight at 0.39%.

The governor of the Bank of Greece also recently made a comparison regarding deposit rates, Giannis Stournaras. In the BoE’s report for 2023, which was made public in April, it stated, among other things, that: “given the satisfactory liquidity conditions they face, credit institutions have only to a small extent incorporated the increases in the ECB’s policy rates into term deposits. The weighted average interest rate on term deposits of households and non-financial corporations averaged 1.8% in 2023 (versus 0.2% in 2022). Compared to the euro area, the increases in interest rates on time deposits in Greece were more limited. As a result, for the first time since 2003, the interest rate on time deposits in Greece is set, from the middle of 2022, at a level lower than the corresponding average interest rate of the euro zone.”