Financial analyst, Samuel Ampah, has outlined some factors which could lead to a reduction in lending rates as appealed by the President.
According to Mr. Samuel Ampa, prime rate, pricing module, general economic performance as well as the banks’ exposure to risks will determine if a bank will reduce its lending rate or not.
The President of the Republic, Nana Addo Dankwa Akufo-Addo, has appealed to banks to reduce their interest rates so as to compliment the efforts being made by his government to create a more stable macro-economic framework in the country.
According to president Akufo-Addo, the first year of his administration has witnessed fiscal discipline being maintained, with fiscal deficit reducing from 9.3% in 2016 to 5.6% in 2017. The projection, this year, he said, is that fiscal deficit will reduce to 4.5%.
Speaking to Ekourba Gyasi on Atinka AM Drive Thursday, Samuel Ampa explained that the President's statement was pointing to the fact that the Central Bank's rate has reduced, exchange rates and treasury bills are doing better.
He was, however quick to add that the correlation will not happen immediately since most of the banks are experiencing high Non-Performing Loans (NPL) which reduces the capital adequacy ratios of these banks.
He added that banks can be very financially strong to be able to reduce lending rates when the high rate of NPL is reduced.
Ghana | atinkaonline.com