The Bank of Ghana’s recent publication on how much the commercial banks charge on their deposits, show that the banks have deliberately increased their interests in a bid to attract more funds.
This is according to the Chartered Institute of Bankers, Ghana [CIBG]. The Central Bank’s latest figures on the financial institutions’ Annual Percentage Rates [APR] and Average Interests [AI], show the banks have moved from an average of 9 percent, to 12.3 percent on customers’ deposits.
According to the report which is a compilation of all charges and interests offered by the 29 commercial banks; new entrant, Capital Bank offered the highest rates on customers’ deposits as at the end of May this year.
Standard Chartered Bank’s annual percentage rate of 4.3 percent was however the least among the 29 banks. But speaking to Citi Business News on the latest development, the President the Chartered Institute of Bankers-Ghana, Clifford Mettle, explained that the figures are attempts by the respective banks to attract more funds due to the low liquidity in the financial system.
“If you compare the recent APR that has been published to the last one was published about two or three years ago, you would realize that the average interest rate at that time on deposits was in the region of about 9% and currently, we are talking about 12.3%.
This is an indication that the interest rate has continually moved up,” he stated. Clifford Mettle added, “It is also an indication of low liquidity in the financial sector which will mean that banks will push up their interest rates to attract more deposits into their banks.”
NPLs account for base rate increase by banks Meanwhile the CIBG boss has attributed the increase in the minimum interest rate offered by the banks on loans and advances to the high Non-performing loans (NPLs) and the energy challenge that has continuously impacted the economy for some time now. The industry average of the base rate according to the central bank was 27.5 percent. Of this, 16 banks offered rates equal to or above the industry average.
Also, Bank of Baroda offered the least base rate at 16 percent with Unibank offering the highest at 40.8 percent. “It is so because of a number of factors; it is also due to the fact that the last year and early part of this year have been very challenging for the banking sector due to a number of reasons including the energy sector issues though we have seen relative stability.” Clifford Mettle explained.
He is however hopeful the trends for the base rates for loans and advances will change positively in the next review.
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