Standard Bank of Malawi cuts interest rates to 32%

Standard Bank has become the first bank in Malawi to reduce interest rates to 32% from 38% in a move Chief Executive Officer Andrew Mashanda says aims at giving the bank’s customers opportunity to obtain affordable loans for reinvestment.

Standard Bank CEO Andrew Mashanda: Bank rate cut

Standard Bank CEO Andrew Mashanda: Bank rate cut

Malawi Kwacha

Malawi Kwacha

Mashanda said in a statement on Friday the bank’s new base lending rate of 32 percent takes effect on Monday August 3 and follows the Monetary Policy Committee’s decision to cut Liquidity Reserve Ratio (LRR) by half to 7.5%.

“Our decision to revise the base lending rate is in response to the Reserve Bank of Malawi’s latest directive to reduce the Liquidity Reserve Ratio (LRR) from 15.5% to 7.5%.

“The reduction in LRR has in turn reduced the opportunity cost of holding liquidity with the central bank, and in turn we have decided to pass the benefit back to our customers and the market. In reducing the base lending rate, Standard Bank has prioritized the needs of its customers who require to borrow for investment,” he said.

LRR is the mandatory portion of commercial bank’s deposits with the central bank expressed as a percentage.

Mashanda said the bank will continue to monitor economic fundamentals so as to take an appropriate position in the interest of its customers and the investing community.

Due to a donor aid freeze coupled with decline in growth (GDP) as a result of low agricultural production caused by floods, Malawi faces a liquidity crunch.

As a result banks have been marking the cost of their money, including forex upwards so as to remain financially sound while maintaining profitability. But the cut in LRR means that the banks have a lot of idle cash which must move out into the market at a cost.

It remains to be seen how the authorities will contend with non-food inflation following the latest adjustment in LRR. Inflation has been rising in recent months.

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14 thoughts on “Standard Bank of Malawi cuts interest rates to 32%”

  1. chimwemwe says:

    why are you revising your forex rates upwards everyday have mercy on poor malawians standard bank dealers

  2. zeze says:

    kkkkk, Malawi, a home of loan sharks.

  3. Concerned citizen says:

    We have to appreciate the fact that the banks have to price in our high loan repayment default rate. This is another factor that makes borrowing more expensive in Malawi.

  4. Concerned citizen says:

    Thank you for the breathing space.

  5. captain says:

    32% before commissions and bla bla it will reach 40% again. Am planning to invest outside my country though its painful coz u are playing us games

  6. Chachacha says:

    Pa Canada apa Reserve Bank’s rate is a mere 0.5% and the chartered bank’s is a mere 2%. Chalo ichi…

  7. Patriot says:

    Not enough, bring it to 24%

  8. kamphulusa says:

    32% is still too high considering that some countries are charging 5% or less

  9. vyaya says:

    So 32% lending rate is low???? Kkkkkk this country is a joke with its banks

  10. Dr. Nissiel Morgan says:

    That is better and promising if aggresively proggresed. As of now Malawi remains prohibitive to invest, yet a shade of light is visible in the horizone if this development of slashing interest rate would continue.

  11. vin mongu says:

    congrats standard bank. this is good but we can do better. but kudos to chuka and colleagues for the trick but now do another trick with the exchange rate.

  12. me says:

    at least well done my bank.

  13. TRUTH says:

    Malawi is impossible for business…….It still has exorbitant lending interest…….Whos is fooling who?

  14. Doctor says:

    Something for the Editor. When running a finacial bulliten it would be nice to carry the major currencies financial indicators at the bottom or that the very least tag a hyper link to them with the rest of the tags you carry at the bottom. It would be a huge help.

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