[ 2016-08-22 ]

Banks increase deposit rates to attract funds – Bankers
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.

Source - citibsinessnews.com

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