The management of GCB bank has revealed that, in spite of the 100 basis points increase in the policy rate of the central bank, GCB will not increase its lending rates.
Management expressed that; there will be no need to increase the bank’s base rate.
Managing Director of GCB Limited, Simon Dornoo explained that the increase in the policy rate was long overdue because most banks envisaged that was going to happen.
“I think that policy rate was expected and banks have already reflected that in their rates. I therefore don’t see that change in our base rates as a result of the 100 basis points increase in the policy rate,” He noted.
Currently GCB’s base rate is pegged at 22.10% per annum, while rates within the banking industry are hovering around 25- 35 percent.
Information gathered indicates that, the central bank actually lends to banks at a reverse repo window of 25%, and before the increase the central bank was lending to banks at 24% so banks have naturally taken that into account in pricing their accounts but GCB in our quest to remain competitive we are going to retain our base rate at where it is for now.
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) in May, 2015 increased the policy rate from 21 percent to 22 percent. The BoG attributed the increase to inflationary and exchange rate trends.
By this, the public anticipated for increase in lending rates of the banks in the country, which most businesses and some government officials have cried against.
The Trade and Industry Minister Dr Ekow Spio Gabrah in a bid to deal with the matter last year commenced a campaign to push the rates down. Earlier he tasked business operators in the country to hit the streets to get banks to reduce the high interest rates.
Some bankers have however criticized the minister’s approach.
According to them government must rather deal with the numerous factors including inflation, monetary policy rate, its increasing appetite to borrow which they believe are pushing interest rates high.
It is said that, Ghana has one of the highest lending rates in the world. This serve as a disincentive for the business community.
Average lending rate of banks in the country hovers around 30% while that of microfinance institutions is around 70%.
In its 2014 annual report, the bank consolidated its position among the top performing banks in Ghana in 2014 following three consecutive years of strong performance; this was borne out of focused execution of the bank’s strategic priorities.
According to the board chairman, Daniel Owiredu, the bank has continued to make progress in areas of brand development, operational excellence initiatives which have involved a significant investment in IT infrastructure upgrade, business re-organization and restructuring initiatives as we strive to keep costs under control in pursuit of long term sustainable profitability.
The bank’s loans and advances to customers increased by 29% to GHc 1.2 billion with strong contribution from consumer banking throughout the year while corporate banking showed strong growth in the last quarter of the year.
Customer deposits increased by 17% to GHc 3.1 billion reflecting successful deposits mobilization campaigns despite tight deposit market conditions.
Mr. Owiredu had stated that, the bank shall continue to invest in the Bank’s risk infrastructure to ensure that the Bank is able to sustain the improving trend in its ratings which is important for enhanced access to money and capital markets. “This is the niche that is ours by tradition and national responsibility.”
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