NBM cuts lending rate by 5 percentage points

National Bank of Malawi (NBM) has reduced its base lending rate by five percentage points to 35 percent from 40 percent effective August 1, according to a press release.

The statement further indicates that NBM has also reduced its mortgage lending rate to 35 percent from the 40 percent.

The bank has also reduced interest charged on savings bond deposits from 20 percent to 18 percent, ordinary saving from 11 percent to eight percent.

NBM has also reduced its deposit interest rates on special savers account from five percent to 4.5 percent, and student save from eight percent to six percent per annum. The bank charges 20 percent per annum on its recently launched FiestaSave account.

NBM joins Standard Bank and Ecobank which recently also reduced their interest rates due to the improved liquidity and other economic fundamentals.

Around April this year ,commercial banks raised their lending rates although the Reserve bank of Malawi (RBM) base lending rate was maintained at 25 percent due to liquidity problems. The then high inflation which has receded to 27.9 percent in June was also responsible for the hike in interest rates.

Bankers Association of Malawi (BAM) executive director Lyness Nkungula, commenting on the interest rates, anticipated a decline if there were tangible economic gains.

She noted that interest rate is a demand-supply issue—the willingness of depositors to save versus investors to borrow.

She added that there is high expectation that interest rates will come down if the economic fundamentals continue to show improved trends.

Continuation header: ‘Interest rate is a demand-supply issue’