The Annual Percentage Rate (APR) and rate on bank deposits have both fallen in the first four months of this year, according to latest data as at April 30, 2017.
A release from the Bank of Ghana, the regulator of the banking industry, showed that the industry average base rate as at April 30, 2017 was 26.8 per cent, a marginal increase of 0.1 per cent, compared to 26.7 per cent at the end of March. At the start of the year (end-January), the industry average base rate was 27.6 per cent, giving a year-to-date drop of 0.8 per cent.
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 fall in the APR rate means that it is cheaper for customers to borrow from the financial institutions, although the APR rate is still high if compared to other African countries.
Similarly, the average interest paid by banks on money deposited by customers has also fallen, a disincentive to savers. The average deposit rate at end of April this year was 11.3 per cent, a marginal increase of 0.1 per cent, compared to 11.2 as at March 31. At the start of the year (end-January), the average deposit rate was 11.9 per cent, giving a year- to- date decrease of 0.6 per cent.
The central bank’s compilation covered 32 universal banks operating in the country. Average interest paid on deposits is the average interest paid by banks on deposits over the period. Base rate reflects the minimum interest rate that can be charged on loans and advances.
The publication of these rates is to promote transparency in the pricing and provision of banking services. Bank of Ghana aims to promote accountability of its decision making and build understanding of the monetary policy formulation process among stakeholders through the publication of these documents.
The fall in the APR rate and also a monthly decline in inflation rate will be a boost for the new government which has a target of reducing the country’s fiscal debt position and also hopes to increase the Gross Domestic Product (GDP) rate to 6.3 per cent, up from 3.5 per cent recorded last year.
The data showed that Standard Chartered Bank charged the lowest interest on loans of 16.1 per cent while indigenous bank, The Royal Bank had the highest industry interest on loans of 35.5 per cent.
Regarding interest on deposits, Access bank paid the highest rate of 16.4 per cent while at 3.4 per cent, Standard Chartered Bank offered the lowest interest on deposits.