Annual Report 2010 03 August 2011 - Banka Qendrore e ...

CBK
Annual Report 2010
account for 94.5 of total deposits. The large share of Euro deposits indicates a low level of
exchange rate risk for the banking system of Kosovo.
In terms of the maturity, the structure of deposits has remained similar compared to the
previous periods. Time deposits continue to attain the largest share, composing 47.7
percent of total deposits. The remaining share consists of transferable and saving deposits
that in 2010, composed around 34.6 and 17.6 percent of total deposits, respectively.
The structure of time deposits remains dominated by deposits with short term maturity. In
2010, deposits with maturity up to one year represented 76.2 percent of total time deposits,
followed by deposits with maturity of over two years, which represented 15.3 percent of
total time deposits (Figure 14). The remaining share of time deposits mainly consists of
deposits with maturity of over one year and up to two years, which represented 8.5 percent
of total time deposits in 2010. It is worth mentioning that in 2010, deposits with shorter
maturity decreased their share to total time deposits, while deposits with longer maturity
increased their share. Thus, deposits with maturity of up to one year decreased their share
by 8.3 pp, while deposits with maturity of over two years increased their share by 8.2 pp.
The persistent growth of deposits with longer maturity will have a positive impact in the
extension of longer-term lending and at the same time, it will improve the liquidity position
in the banking system. The approval of the law on the deposit insurance is expected to
affect positively the depositors’ trust towards the commercial banks, which may contribute
to the further increase of longer maturity deposits.
3.3.2.2 Interest rates
The movements of interest rates in
Figure 15. 12-month moving average of interest rates
2010 were characterized with a
decline of interest rates on
15%
5%
deposits, while interest rates on 14%
loans recorded a slight increase. 13%
4%
The average interest rate on
12%
3%
11%
deposits (12-month moving
10%
average) decreased from 4.3
2%
9%
percent in 2009 to 3.7 percent in 8%
1%
2010, while the average interest 7%
rate on loans increased to 14.6
6%
0%
2007 2008 2009 2010
percent in 2010 from 14.4 percent
Loan interest rate Interest rate spread Deposit interest rate (right axis)
in 2009 (Figure 15). The decline of
Source: CBK (2011)
deposit rates during 2010 may be a
result of the slowdown of lending activity by the banking sector, which has reduced the
demand for deposits. The interest rate spread in the end of 2010 reached at 10.9 pp, which
represents an annual increase of 0.8 pp.
Interest rates on household deposits and enterprise deposits were similar during 2010. The
highest average interest rate on enterprise deposits in December 2010 was 5.14 percent,
which is offered for deposits amounting over euro 250 thousand and with a maturity of over
two years. In the same period, the highest average interest rate for household deposits
reached at 5.14 percent, which also applies to deposits with maturity of more than two
years. Regarding the average interest rates on loans, loans to enterprises maintain higher
interest rates compared to household loans. Standing at 13.8 percent, the average interest
rate on loans to enterprises was by 1.4 pp higher than the average interest rate on
household loans.
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