That’s expensive. Prices are skyrocketing. The interest rates are high. In June, Norges Bank once again raised the key interest rate. With a double interest rate hike, it went up from 3.25 to 3.75 percent. They are announcing a new interest rate hike as early as August. Norges Bank expects the key interest rate to be as high as 4.25 per cent during the autumn. Increased interest rates lead to greater expenses for ordinary people. Along with record high price growth, many Norwegians are experiencing tighter finances than in a long time. Interest rate party for the banks The banks, on the other hand, are not struggling. For them, increased interest rates mean greater income. On Wednesday, the news came that DNB had the highest interest income in a quarter ever. Net interest income increased by NOK 633 million, or 4.3 per cent, from the previous quarter. This corresponds to interest income of NOK 15.2 billion. Last year they had a profit of NOK 32.9 billion. Interest income made up a large proportion of the profit. And they are not alone. In 2022, Norwegian banks had net interest income of NOK 103.3 billion. Photo: Gorm Kallestad / NTB When Norges Bank raises the policy rate, the banks raise the lending rate. Then you pay more for your loan. Usually the banks then also raise the deposit interest rate. Then you earn more on the money you have in your account. news has been in contact with DNB, which will not comment on the matter. How it works When you deposit money in the bank, you are in practice lending the money to them. You get paid for this, through the deposit interest. When you borrow money from the bank, you pay for the loan. This is the lending rate. Banks lend customers’ money to other customers – at a much higher lending rate than the deposit rate you earn from having the money in your account. That’s how banks make money. The greater the difference between the lending rate and the deposit rate, the more they earn. – Has become a cash cow The Consumer Council believes that the banks must take greater social responsibility, and allow increased interest income to benefit customers. Subject director at the Consumer Council, Jorge Jensen. Photo: John Trygve Tollefsen – Deposit customers have become a cash cow for the banks. Many banks are quick to increase the lending rate when the key rate rises. But now many are delaying increasing the deposit rate, or only partially increasing it, says director of the Consumer Council, Jorge Jensen. Professor of financial economics at NTNU, Are Oust, says that this is a common tactic. – By increasing the lending rate faster or more than the deposit rate, the banks’ net interest margin increases, he says. This means that they earn more money from the interest. In addition to the fact that they profit from increased interest rates themselves, and from the fact that more people are now taking out loans. – Exploiting the fact that customers are lethargic Civil economist Hallgeir Kvadsheim believes that interest rates on deposits have become significantly worse in recent years than they should have been. He nevertheless believes that the responsibility for the customers not benefiting from the banks making good profits lies with the customers themselves. – I understand that the banks operate as they do. They take advantage of the fact that customers are lethargic. This applies in particular to some of the large banks. We as consumers have to toughen up and change banks more often, he says. – A lot of money to make The Consumer Council recommends using their financial portal to compare Norwegian banks’ interest rates. At the same time, they encourage more people to renegotiate the interest rates for loans and deposits with the banks. – Far too many people do not use their customer power. There is a lot of money to be made from making a phone call to the bank, says Jensen. He points out that the banks know that they make a lot of money from high interest rates. – Then it is easier to negotiate lower lending rates and higher deposit rates. It’s good for the wallet, says Jensen. – Money doesn’t smell different Kvadsheim believes that many people underestimate the power you have as a customer. – There are plenty of banks who are keen on the porridge, and would like to have you as a customer. You have full opportunity to change banks. And it’s quite simple, says Kvadsheim. He emphasizes that it is safe to change banks. Many banks are covered by the deposit guarantee, which secures your deposits of up to NOK 2 million if the bank goes bankrupt. – The money does not smell any different in a small niche bank than at the larger bank where you have had the money for a long time, says Kvadsheim.
ttn-69
– Exploiting the fact that they are dull – news Norway – Overview of news from different parts of the country
