T-bill yields drop to 3.85%

TIRANA, Oct. 9 – Treasury bill yields continue hitting new records as lending has plunged into negative growth rates and banks are more and more increasing investments in government securities. 12-month T-bill yields dropped to a historic low of 3.85 percent in the Bank of Albania auction held this week, down from 4.04 percent in the previous auction and 6.6 percent in January 2013, registering a 2.75 percent drop during the first three quarters of this year.
Meanwhile, six-month T-bill yields dropped to 3.68 percent, down from 3.99 percent in the previous auction and 6.08 percent in January 2013.
Experts explain the declining trend in T-bill yields with more active participation by commercial banks which have turned to investments in government securities due to poor demand for new loans as non-performing loans have reached a record 24.4 percent. The latest cut to the key interest rate to a historic low of 3.5 percent has also had a positive impact.
While loan interest rates have in general remained unchanged during the past two years of the easy monetary policy the Bank of Albania has followed, interest rates on deposits have significantly dropped. Since September 2011, the Bank of Albania has cut the key interest rate by 1.75 percent to 3.5 percent in several consecutive interventions, but the moves have only been reflected on lower T-bill yields and interest rates for lek-denominated deposits.
Meanwhile, average interest rates on lek-denominated loans have remained unchanged during the past two years, reflecting the failure of the consecutive cuts to the key interest rates in the past two years.