Greeks looking for cheaper loans from local banks in the wake of the European Central Bank’s interest rate cut yesterday are likely to be disappointed, with analysts saying borrowing costs are likely to remain little changed and savings rates edging down. Citing the «subdued pace of economic growth and the appreciation of the exchange rate of the euro,» the ECB yesterday trimmed its benchmark rate by 25 basis points to 2.5 percent, the lowest in three and a half years. The central bank last pared its rate on December 5 by half a percentage point. While Greek banks were quick to follow in the ECB’s footsteps last time, analysts said falling profits could pose a strong deterrent this time. A string of 2002 results released last month showed the sector continued to be weighed down by the sluggish stock market and constrained in its ability to slash costs, especially personnel costs. National Bank, the largest by assets, reported a 56 percent fall in net profits. Of the five major banks, Commercial Bank performed the worst as net profits plunged by 64 percent. Alpha Bank’s and Eurobank’s losses were moderate at 28 percent and 10 percent respectively. Piraeus Bank was the only one to report positive growth. Emblematic of the sector’s problems, Alpha Bank last month reversed a three-year trend and decided to jack up mortgage and consumer lending rates as well as credit borrowing costs. Marinos Yiannopoulos, executive general manager and chief financial officer of Alpha Bank, told Kathimerini English Edition that the bank has no plans to emulate the ECB. «We don’t see any reason for doing anything. If it [ECB’s rate cut] had been bigger, then something could be done,» he said. National Bank’s deputy governor, Andreas Vranas, told Kathimerini English Edition that the bank will probably discuss the interest rate issue next week when Theodore Karatzas, the bank’s governor, returns from abroad. While the most prudent move would be to maintain spreads, the probability is that banks will probably widen them, said Manos Giakoumis, banking analyst at P&K Securities. HSBC yesterday set the lead by announcing a 15 basis point reduction in the fluctuating rate for its mortgage loan. Giakoumis said banks will probably hedge their move by minimizing lending rate cuts and slashing more off savings rates. «The last rate cut in December was marked by bigger reductions in deposit rates than lending rates. Banks will do the same this time,» he said. He said slowing credit expansion is also putting pressure on the sector. The credit boom has brought its own problems, said Sophia Skourtis of Marfin Hellenic, as evidenced in the increased default risks. The five major banks have shed 16.3 percent since the beginning of the year compared with a 10.3 percent drop in the benchmark index.