The Interest Rate on Loans and Deposits and Their Difference 2007-2013

Open Data Albania has conducted a research work on the interest rate for deposits and loans in Albania based on data from the Bank of Albania for the past seven years. The loan interest rate is an indicator of the average interest rate for loans granted by commercial banks for different periods. While the deposit interest rate is an indicator of the average interest rate on deposits placed in commercial banks for different periods. The difference between the average interest rate of loans versus deposits is a good indicator of the gross income of commercial banks.

The trends of the loan interest rates in ALL, EUR and USD in the last seven years are given in the following graphic:

^{Source: Bank of Albania
Analysis and Comments: ODA}

The average interest rate of 1-year deposits in ALL, EUR and USD in the last seven years:

In December 2007, the average interest rate on loans with a maturity of more than 5 years was 13.72%, and by the end of June 2013 was 10.25%, with a decrease of almost 3.5%.  At the same time the average interest rate on 1-year deposits in 2007 was 6.33%, and in June 2013 was 4.59%, with a decrease of 1.7%.

The difference between the average interest rate of loans versus deposits is a good indicator of the gross income of commercial banks. Based on this data, it can be concluded that the interest rate on deposits in ALL has decreased more than the loans interest rate, so we can conclude that the gross income of banks from their normal activity has increased.

The same phenomenon is present in loans and deposits in foreign currencies (USD and EUR). In this case between the years 2007-2013, for the loans in USD and EUR, the average interest rate has decreased by 1.9% and 0.9% respectively, while the interest on deposits has decreased by 2.4% and 2%. So even in foreign currencies, commercial banks secure a higher profit compared to 7 years ago.