STANDARD Chartered Bank Zambia has reduced its base lending rates by two per cent, down to 19 per cent, a move the bank says is in response to the single-digit inflation rate which stands at 8.4 per cent.
Standard Chartered Bank Zambia managing director, Mizinga Melu, who announced the reduction yesterday, said the decision to reduce the rates was done to reciprocate the low inflation rate and to pass over the benefits to the customers.
Her bank wants to meet the customer needs and despite the cost of doing business in Zambia being high, reducing the lending rates would be good for Zambia’s local economy.
In reducing the rates, Mrs Melu said the bank expected a rise in business activities from both large and small-scale enterprises which she said was good for the local economy.
“We recognise that the coast of doing business in Zambia is high but in view of the single-digit inflation levels, we would like to reciprocate by reducing the base lending rates from 21 per cent to 19 per cent to have one of the lowest rates in the country. This just tells of a bank in a strong position,” she said.
The Bank of Zambia has been challenging commercial banks to ease lending regulations and also reduce on the base lending rates, especially that inflation has been reduced to a single digit rate.
And Standard Chartered Bank yesterday announced that they had posted a net profit of 340 per cent over the last one year to K69 billion.
Mrs Melu said apart from the net profit posting a huge increase, the bank’s balance sheet was showing positive figures of K3.5 trillion, which indicated a 39 percentage growth from last year to June 30 this year.
“We are Zambia’s most profitable bank and all banking indicators are showing positive figures. Our net profit has grown 340 per cent, our balance sheet has grown 39 per cent, the deposits have also grown 31 per cent to K2.721 trillion. We are standing in a very strong position,” she said.
She said the bank posted a growth of 27 per cent on the revenue which had raised the figure to 224 billion.
Mrs Melu said her bank performed well despite coming from the global financial turmoil and attributed this to the bank’s strategies being correct, before, during and in the aftermath of financial crisis.
And bank acting director, consumer affairs, Sonnie Zulu said the bank would continue to introduce customer-tailored products that would make it a leading bank.
And the bank handed over two motor vehicles to winners of its ‘Draw and win’ competition from which it raised K200 billion.
Medson Chisi and Enock Mundia were the two winners of the two new Toyota Hilux vehicles.
[Times of Zambia]
They should also consider waiving loans for customers who have repaid the bank about 80% of the borrowered money.This will enable customers to get new loans.As for me i have paid 75% of the borrowered money,so i cant go for a new one. :)>-
”And Standard Chartered Bank yesterday announced that they had posted a net profit of 340 per cent over the last one year to K69 billion”
Thats the reason Banks are rushing to Zambia to make a quick buck.Yes the reduction is welcome however StanChart can reduce it further if we have to go by their claims that its because of the single digit inflation.
I know FNB base rate is at 17% which i think StanChart should hace emulated especially having netted a profit of 340%
This is good news though Banks have to narrow the spread between the lending and depositors rates. This gap has made banks to take cheap money and parcel it very expensively, a scenario that has attracted a lot of commercial banks into the country. Banks can boast of massive growth in revenue, after tax profits and financial position asset portfolio because of cheap money they mop around from farmers and business community but I feel a balance should be struck between supernormal growth and community plough back. BOZ should have a policy to lend at low rates to non bank financial institutions so as to play down the lending rates, as these will have excess money to lend cheaply.
this bank is in panic mode no direction and in poor management. explain those atmcards frauds. management needs to be changed we dont want directors who play to the gallery always in newspapers and tv. look at baclays zanaco stanbic investrust i have neva seen director always behaving like father xmas
Watch the space in the financial market when the 3 Es are in-charge. You will realize that the retail lending rates have indeed started declining albeit by far lower magnitudes than the decline in interbank rates. The first and second quarter returns by some of the banks if not all have kept showing that the year 2010 is bright so will be 2011. Expect more capital expenditure too that should trigger business activity in the economy.
Good leadership and practical policies in place are fostering national prosperity for all.
Wanzelu; I agree with you: with a 340% profit, Stanchart can do better than this 19% lending rate. This is still too high. With annual inflation at 8.4%, all the banks would ctually still make lots of money if they brought their interest rates down to 10% on average.
For many years under a commandist economic system which populist want back, we complained about banks continued declaration of huge profits in a depressed and none creative economic environment. People had been wondering where these profits were coming from. Professionals were afraid to disclose that those reported profits were being unethically engineered to the detriment of real growth. Chief executives were ready to do anything to show that they were making profits, including paying dividends when the truth was they were running astronomical loses though saved by injection of tax payers’ money.
But under the pragmatic RB administration, we have come to a stage where banks have recognized that it is not a crime to make losses. If a loan is booked, and because of the poor economic environment, the loan becomes non-performing, if it is provided for and disclosed honestly, the market will not punish anyone for it a fact every executive appreciates in today’s economic order. When the 3 Es are in control, hope becomes a national issue. RB has placed this country on a strong foundation though more is expected of his administration.
Then banks like stanchart are not being sincere. If the current MD is not careful, she will be dispensed of, just like her counterpart at Barclays was moved to west africa and later dumped. If we customers deposits K 100 million, pay us well as interest and not the funny 2 percent calculated over 12 months and one wonders whether it is us who are doing the banks a favour or is it the other way round.
“STANDARD Chartered Bank Zambia has reduced its base lending rates by two per cent, down to 19 per cent, a move the bank says is in response to the single-digit inflation rate which stands at 8.4 per cent.”
This is adding some whip cream to the humble pie I am serving to all those who have argued against me when I tell them Commercial Banks do consider inflation when setting their lending rates. I hope you enjoy the pie.
Good Monetary policy by Dr. Fudanga has resulted in a positive outcome from commercial banks in the Zambian banking industry. It is for this reason that Stanchart can post such levels of growth thanks to the banks hard work as well as Dr. Fudanga’s monetary discipline.
We congratulate Stanchart for the move to cut lending rates. It is most welcome.
The mandate of the BOZ is monetary and financial systems stability. And BOZ is delivering on that mandate. That is what matters. Today we can proudly challenge anyone that inflation is moderate. There is no abnormal clipping volatility in money market and exchange rates. The banking system that was at risk of catching the Global sneeze placing it on the verge of collapse is now resoundingly stable and growing in urban and rural portfolios. All banks’ balance sheets are growing.
am may not understand. But I think 340% profit in a third world country is too much and maybe immoral! you see the inflation rate is 8.4% but the interest rate is 19%. I need guidance on this. I fee banks are stealing from ordinary Zambians
You can this incentive to conduct business in Zed? Really!! I know its not a fair comparison, but with globalization, why should I pay 19% interest in Zed when I can pay 4% interest in the US. Government need to ensure that inflation stays low (below 5%) and regulate the bank to lend at even lower rates. This 19% prime rate is almost double what I even pay for a short-term loan (credit card). Sorry but it is not incentive enough to borrow money from Zed banks
You call this incentive to conduct business in Zed? Really!! I know its not a fair comparison, but with globalization, why should I pay 19% interest in Zed when I can pay 4% interest in the US. The Government needs to ensure that inflation stays low (below 5%) and regulate the banks to lend at even lower rates. This 19% prime/base rate is almost double what I even pay for a short-term loan (credit card). Sorry but it is not incentive enough to borrow money from Zed banks
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To #7 & 13 that profit is low even in africa.You mislead others.They made 3.8m$ the previous yr which increased by 340% to 13m$.Try more than 100m$ in nigeria,kenya & za yet zambians want to play with big boys.You cannot hope to create serious employment,new branches if that is the most profitable bk in zambia.Banks reap billions elsewhere and in turn employ like 50-80 thousand in uk $ germany.
From The Post and the article ‘Stanchart Zambia records K224 billion H1 revenue’, by Mutale Kapekele:
” And Melu, who is Standard Chartered Bank managing director, has announced that the bank has continued to record profits year-on-year. “Our total revenue has grown 27 per cent year-on-year to K224 billion and our balance sheet has grown 30 per cent year-on-year to K495 billion,” she said. “Our deposits have grown 31 percent year-on-year to K2, 721 billion and our net profit has grown 34 per cent year-on-year to K69 billion.”
So who are they lending to? And why are they keeping lending rates so high? Are they buying government bonds instead of lending to consumers? What is going on?
While we appreciate the reductions in lending rates, one still wonders as to why others should reduce to 19% and others to 14%. Why shouldn’t this be uniform if the factor is the single digit inflation rate. please educate me. On the other if the accessbility remains as impossible as it has always been then we would rather do without the reductions. This should no just be mere rhetoric, people must be seen to have access to the loans at those rates. Please, Banks, make it easy for the loans to be accessed by businessmen other than rushing to reducing to 14% when you know none of your clients will get even a K10 million Loan. Please be realistic, especially fi Investrust Bank. They know no one will get that O/D or Loan in the next ten years. VERY FOOLISH INDEED.
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