In line with the Bank of Zambia’s reduction of the Monetary Policy Rate last week, Stanbic Bank Zambia has announced a reduction in its base lending rates, making it one of the banks with the lowest rates in the country.
Stanbic Chief Executive Charles Mudiwa made the announcement at a press briefing today (May 22), adding that the reduction was effect from May 25. The bank, he said, was slashing all Monetary Policy Rate- linked loans by 1.5 percent.
Mr Mudiwa said the reduction in interest rates would immediately pass on the benefit to customers and lower the cost of credit thereby increasing economic activity in the productive sectors of the economy and lessening the burden on borrowers.
“As Stanbic, we believe that Zambia is our home and we must therefore drive her growth. The Bank of Zambia has set the benchmark and we must complement the central bank’s efforts by also reducing our rates. By reducing our lending rates we are helping our customers grow and helping the country boost the much-needed growth and diversification,” he said.
Mr Mudiwa noted that to further increase money supply, the Statutory Reserve Ratio, which is the minimum amount certain institutions, such as financial entities and insurers must maintain as liquid funds to avoid insolvency and are used to influence liquidity and interest rates, was also reduced significantly.
Last week, the central bank’s Monetary Policy Committee decided to reduce the policy rate to 12.5 percent from 14 percent, and the Statutory Reserve Ratio to 12.5 percent from 15.5 percent.
Mr Mudiwa said from the actions taken by the Bank of Zambia, it was clear that the central bank saw the local economy set for a turnaround. He said the measures were both aimed at increasing access to credit. Inflation was lower at 6.7 percent in the first quarter of 2017 compared to the previous quarter at 7.5 percent while the exchange rate remained stable.
Stanbic Bank Zambia supports more than 10,000 local business banking customers in their operations, providing more than K1.4 billion of loans and advances to them.
Last week, BOZ Governor Dr Denny Kalyalya noted that commercial banks’ nominal lending rates declined marginally to 28.8 percent in March 2017 after peaking at 29.2 percent in December 2016, with the range between the lowest and highest lending rates narrowing to between 10 percent and 38.5 percent in March 2017, from between 10 percent and 41 percent in December 2016.
Dr Kalyalya noted that the relatively high lending rates reflected in part commercial banks’ response to rising non-performing loans, higher returns on investments in government securities, and lagged response to movements in short term money market rates and inflation.