First Capital Bank Zambia Limited has been found to be Zambia’s most expensive lender of loan facilities among the 18 commercial banks, charging clients the highest interest rate of 32.25 per cent on personal loans.
According to a publication of interest rates and bank charges for personal and other retail accounts, compiled and published by the Bank of Zambia (BoZ) as at June 30, 2019,First Capital is the most expensive lender of credit charging consumers an annual interest rate of 32.25 per cent, among all the 18 commercial banks in the country.
BoZ data reveals in a demonstration of the cost of accessing a salaried-backed loan across all 18 commercial banks that First Capital’s margin above the central bank’s Monetary Policy Rate (MPR), which was maintained at 10.25 per cent last Wednesday, was 22 per cent, making the bank the second highest in terms of its margins above the benchmark lending rate.
Indo-Zambia Bank Limited was the second most expensive lender, charging its clients an interest rate of 30.75 per cent for a salaried-backed loan, while First Alliance Bank Zambia Limited was marginally lower in third position, charging clients an effective annual interest rate of 30.50 per cent for its salaried-backed loans, with its margin above the BoZ’s MPR rate at 20.25 per cent, leaving Investrust in fourth place, who charge consumers an effective annual interest rate of 30 per cent on its salaried-backed loans, and also have the highest margin above the central bank’s MPR rate of 24.5 per cent.
Among the 13 commercial banks that charge customers below the 30 per cent lending rate threshold include: Stanbic Bank Zambia Limited, Barclays Bank Zambia Plc, First National Bank (FNB) Zambia Limited, Standard Chartered, Zanaco Plc and Bank of China Zambia Limited, whose lending rate on salaried-backed loans is the cheapest at 10.25 per cent.
On the mortgage side, United Bank for Africa (UBA) (Z) Limited peg their mortgage loan facilities at an effective annual interest rate of 15.25 per cent, making the bank the cheapest among the entire banking sector, while Stanbic charges clients the highest at 26.75 per cent for a mortgage facility.
In terms of lending rates on loan facilities for the Small to Medium Enterprise (SME) sector, AB Bank Zambia Limited was found to be the highest on the local market among the 18 commercial banks, with the highest interest rate of 77.63 per cent, while FNB Zambia were found to offer the cheapest SME loans, charging clients at 24.5 per cent.
According to BoZ data, commercial banks’ nominal average lending rates rose to 25.4 per cent as at June 30, 2019, from 24.6 per cent in March, this year.
The rise in interest rates followed a marginal upward adjustment in the benchmark policy rate in May, 2019, by 50 basis points to 10.25 per cent from 9.75 per cent, and tight liquidity conditions.