STANDARD Chartered Bank has reduced its Kwacha base-lending rate from 24 per cent to 21 per cent with effect from next month because of stability in the economy.
Standard Chartered Bank managing director ,Mizinga Melu said the reduction in the base-lending rate by three per cent was a result of the drop in the level of inflation and other economic benchmarks.
Another bank, Invest Trust Bank, also reduced its rate by a similar margin recently.
Ms Melu, who is vice-chairperson for the Bankers’ Association of Zambia, called on other financial institutions to review their base-lending rates downwards to support economic growth.
Last month, President Rupiah Banda, at the official launch of the First National Bank (FNB) in Lusaka, asked commercial banks to bring down loan interest rates because the current harsh lending conditions were responsible for the poor loan recovery rates and were eroding confidence in the banking sector.
The president said there was equally a risk of discouraging both savings and investments due to ironically low rates on deposits.
Mr Banda added that there was need for financial houses to bring down the high loan interest rates and other bank charges, which had made loan repayments exorbitant.
The rates for other banks are Barclays Bank at 25 per cent, First Alliance (23 per cent), Investrust (22 per cent) and Eco-bank (19 per cent).
Ms Melu said from January this year, the Government had managed to reduce inflation rate from 16 per cent to the current level of 12.3 per cent.
“We recognise the efforts and progress from the Government, through the Bank of Zambia, in reducing the level of inflation in the country. Inflation has reduced from a high of 16 per cent in January 2009 to the current level of 12.3 per cent,” she said.
Ms Melu said there had been consistent reduction in the benchmark market rates such as the three months’ Treasury Bill rate which had dropped in the last two months.
She said Treasury Bills in the last two months had on average dropped between four per cent and six per cent.
Ms Melu said the bank was committed to assisting the customers in growing their businesses.
She said as a partner in national development, the bank realised that the benefits from reduced benchmark rates needed to be passed on to the productive sectors to increase economic activity and create more jobs.
“We, therefore, believe that with the reduction in the cost of finance, our customers will continue to grow their businesses and create more wealth for the nation,” she said.
While the severity of the global financial crisis had been unprecedented, the Bank of Zambia (BoZ), financial institutions and other stakeholders played an active role in facilitating the development of the financial markets in order to improve their efficiency and effectiveness.
She said the introduction of an overnight lending facility for commercial banks by BoZ with effect from next month would contribute to improved liquidity management for financial institutions.
Ms Melu said the introduction of a wholesale lending rate by BoZ next year would further contribute to the reduction of lending rates in the market and, consequently, the productive sectors of the economy could be able to borrow at lower rates.
Ms Melu said the bank was confident of the resilience of the Zambian economy and still recognised that right across the continent, the economic environment would continue to be challenging going into next year.
“We are seeing ‘green shoots’ in the Zambian economy led by increased productivity in the mining sector,” she said.
Meanwhile, head of asset and liabilities management for global market dealing, Kabwe Mwaba said the dollar base-lending rate had been fairly stable in the last six months.
[Times of Zambia]
