Interest rates drops marginally—BOG report

The Bank of Ghana has released its latest data on Annual Percentage Rates (APR) of interest charged on loans and credit advances and the Average Interest (AI) paid on deposits by banks.

The APR is the true interest rate banks and non-bank financial institutions charge the public on loans and advances. It reflects the true cost of borrowing and includes charges and commissions levied by banks.

The latest data release is based on figures available as at 31st January, 2017 for 31 commercial banks who are currently in full operation.

According to the data, the industry average base rate as at January 31, 2017, was 27.6 percent, a marginal drop from the 28 percent recorded in November 2016, when the data was last compiled. The average deposit rate recorded 11.9 percent representing 0.2 percent decrease, compared to the figure recorded in November.

On base rate which reflects the minimum interest rate that can be charged on loans and advances, the Royal Bank according to the report, offered the highest base rate of 38.1 percent, on loans and advances it issues to customers, followed by Capital Bank paying 35.0 percent, HFC Bank 34.5 percent, Sahel Sahara (BSIC) pays 34.2 percent and Universal Merchant Bank also paying 33.3 percent.

In the report the Bank of Baroda offers the least base rate at 14.6 percent, followed by Standard Chartered Bank offers 18.4 percent, Barclays Bank offers 21.2 percent, Stanbic Bank 21.5 percent and SG Bank also charged 22.3 percent.

New entrant into the banking industry, Sovereign Bank paid the highest interest  of 19.5 percent all deposits made, followed by Capital Bank paying 18.7 percent, Stanbic Bank paying 16.8 percent and Omnibank being the fourth on the list paying 15.8 percent.

The BOG report which covers 31 banks in the country, also showed some five banks as those who paid the least interest on deposits. They are Standard Chartered Bank paying the lowest interest on deposits of 4.3 percent, followed by Energy Bank paying 5.7 percent, ADB 6.7 percent, GT Bank 7.3 percent and Ecobank which is also paying 8.4 percent.

18 banks were found to be offering interests on deposits above the industry average of 11.9 percent while 16 banks also charge above the industry avaerage of 27.6 percent interest charged on loans and credit advances.

Meanwhile, for the true interest charged on loans and advances to households for mortgage purposes, (which also include charges and commissions levied by banks); Bank of Baroda offers the least between 24.5 to 28.8 percent; below an industry average of 33.3 percent. 9 out of the 31 banks offer interests equal to, or above the average. But UBA offers the highest interest rate of 45.0 percent on mortgage.

Also, enterprises in the agric sector seeking loans for their businesses, are expected to pay an average of 33.0 percent on loans with Standard Chartered bank offerring the least rate between 18.4-28.0 percent, while Unibank offers the highest rate of 45.5%.

In addition, companies within the manufacturing sector that apply for loans from commercial banks pay an average of 33.1 percent which is being offered by 29 banks out of the 31.

On construction, the average annual percentage rate for companies is 33.1 percent with only 25 commercial banks offering construction loans.