Annual Percentage Rates (APR) and Average Interest (AI) released by the Bank of Ghana for the second time this year and published in the DAILY GUIDE yesterday shows that the Agriculture Development Bank (ADB) offers the best competitive vehicle and mortgage loans of 21.81 and 21.77 percent interest rates respectively to households.
International Commercial Bank (ICB), United Bank for Africa (UBA) and Fidelity Bank followed closely on the heels of ADB with the best competitive vehicle loans of 23.26, 24.24 and 24.68 percent interest rates respectively.
On the other hand, the rates charged by ICB, UBA and Fidelity for mortgage loans were 23.26, 24.45 and 24.68 percent respectively and these were the best.
According to the Central Bank's second research which this time around tracked interest rates on vehicle, mortgage and other consumer credit to retail customers of 23 universal banks and three non-bank finance houses, BPI, Stanbic and the National Investment Bank offered the highest rates for vehicle and mortgage loans of 36.90, 37.37 and 39.0 percent respectively.
ADB, ICB and UBA again charged the least rates for other consumer credit of 23.77, 23.26 and 24.24 percent rates in that order to individuals.
On the other hand, BPI, Stanbic and the National Investment Bank charged the highest rates of 36.90, 37.37 and 39.0 percent rates respectively.
For the deposit rates, Guaranty Trust, ICB and CAL Banks offered the best competitive deposit rates of 7.67, 7.50 and 7.34 percent respectively.
However, the concern by the Central Bank was the excessive interest spreads by banks in Ghana.
The interest spread between lending and deposit rates was too wide as banks charge between four and six times as much on loans as they offer for deposits.
On enterprises or corporate institutions, ADB offered the best rate of 17.60 percent to the agriculture sector followed by Ecobank and Ghana Commercial Bank (GCB) with 21.03 and 23.48 percent respectively.
Conversely, the cheapest rates to the manufacturing sector on average were charged by Ecobank followed by UBA and ADB with 21.03, 21.30 and 23.27 percent respectively.
Importantly, Ecobank, GCB and ADB charged the cheapest rates on average of 23.32, 23.48 and 24.27 percent respectively to commerce.
For construction, Ecobank, GCB and ADB again offered the best competitive rates of the APR to the construction sector.
However, Guaranty Trust, ICB and CAL Banks offered the best competitive deposit rates on average of 7.67, 7.50 and 7.34 percent respectively.
For the non-bank financial institutions, Unique Trust Financial Services offered the best competitive rates of 61 percent to agric, manufacturing, commerce and the construction sectors.
According to the BoG, the APR is the true interest rate banks and non-bank financial institutions charge the public on loans and advances and thus it reflects the true cost of borrowings and charges and commissions levied by the banks.
The regular publication of the APR is seen by many analysts as a welcome development since it will push the banks to reduce their loans to the various sectors and increase their deposit rates due to competition.
By Charles Nixon Yeboah
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