Economist, Dr. Ebo Turkson has told Citi Business News that interest rates on loans will continue to be high, until competition amongst the banks improves.
The latest data from the Bank of Ghana indicates that the average base rate at which commercial banks lend to their customers has dropped by only 0.1 percent.
The figure dropped from 25.7% in December 2017 to 25.6% in January 2018.
According to Dr. Turkson, a competitive banking landscape will force banks to offer lower interest rates in order to attract customers.
“The interest charged on loans serve as a main source of income for some banks. There isn’t much competition in terms of banking in this country for customers who want loans to be offered at lower rates due to the competitive nature of the market,”.
He was of the view that competition among banks will push them to offer lower interest rates since demand for customers will be high.
“When competition intensifies and banks are trying to attract customers to come and do business with them then we’ll see a drop. But as we speak, there tends to be a sticky trend downwards in the interest rates and that’s because there isn’t enough competition,” he added.
According to the latest Bank of Ghana’s Annual Percentage Rates (APR) and Average Interest (AI) report, Premium Bank tops with its base rate at 34.3 percent.
This is however an increase from the previously recorded 34.2 percent. At the second position is Unibank with 33.7 percent base rate.
The Royal Bank occupies the third position with a base rate of 32.9 percent. The fourth and fifth positions are occupied by Sovereign Bank and Heritage Bank.
At the 21st position in the same report is Bank of Baroda with a base rate of 22.0 percent. First National Bank both occupies the 22nd position with a base rate at 21.5 percent.
While the 23rd position is occupied by Zenith Bank and Fidelity Bank.
The 24th and 25th positions are Societe General and Stanbic Bank with base rates of 18.9 and 18.4 percent.
Also, with, 18.2 and 18.1 are Standard Chartered Bank and Barclays Bank, with the 26th and 27th positions.
In all, thirty one banks were surveyed in the latest Bank of Ghana’s Annual Percentage Rates (APR) and Average Interest (AI) report.
The Vice President Dr Mahamudu Bawumia in August last year called on the then newly sworn in members of the board of the Bank of Ghana (BoG) to reduce the current high interest rates in the country.