Banks earn billions on consumer loans

MoneyMoney.Photo: Gorm Kallestad / SCANPIX .

The largest consumer banks had a profit of 2.3 billion last year. The sum represents an increase of one billion from the previous year, according to newspaper Dagens Næringsliv.

Several consumer banks have come on the Norwegian market during the past year. The possibility of good income contributes to several established banks offering the service, writes the newspaper. FSA is concerned about the increase.

– Consumer loans represent a small part of total household debt, but this debt is growing strong and the market is characterized by very active marketing by banks and finance companies, says director Emil R. Steffensen from FSA.

Consumption loans to Norwegian customers amounted to 83 billion at the end of the first quarter of this year.
Unlike other Nordic countries such as Finland and Estonia, Norway has no strict regulation of how high interest rates banks can take on consumer loans. FSA has considered it, but the effect of an interest rate cap is uncertain.

Banks offer customers consumer loans using a good deposit rate, which represents a maximum of 2 percent in the current low interest. Customers’ deposits are used to lend money at an interest rate of between 10 and 20 percent.

Source: NTB scanpix / Norway Today