Lending rates continue to fall
What you need to know:
The Bank of Tanzania has announced that Interest rates charged on loans and offered to deposits by commercial banks have declined in September 2018,
Dar es Salaam. Lending rates have fallen, according to the Bank of Tanzania (BoT).
Its October 2018 economic review put the overall lending rate at an average of 17.42 per cent in September 2018, down from 18.65 per cent in September 2017.
BoT attributes the decrease to an accommodative monetary policy stance and measures of improving information asymmetry such as using credit reference database.
That happened at a time when BoT set a benchmark interest rate based on the monetary policy framework for stability.
It also happened at a time when personal loans got the largest pie of commercial banks’ total credit to various economic activities.
Lenders have shifted to salaried workers to increase their profits amid declining yields in government securities and increased default rates by other economic activities. During the past six months, BancABC, Ecobank, PBZ, National Bank of Commerce, CRDB Bank and NMB Bank announced reductions in interest rates on personal loans.
CRDB Bank Plc on May 11 announced rate cuts from 22 to 17 per cent.
That was followed by a similar announcement by NMB Bank which reduced its rates from 19 per cent to 17 per cent for salaried workers.
Meanwhile, the overall time deposit rate decreased to an average of 7.49 per cent in September this year compared with 9.8 per cent in September 2017.
Tanzania is home to nearly 60 commercial banks. The banking industry’s profit fell from Sh438 billion in 2015 to Sh423 billion in 2016 and Sh286 billion last year.
The industry shed labour as the situation worsened.
In the year to June 30, 2017, nearly 400 jobs were lost as banks focused on internal consolidation to remain afloat when nonperforming loans bit.
