First National Bank (FNB) Ghana, according to the Bank of Ghana’s (BoG) September 2021 Annual Percentage Rates (APR) report, offers the lowest interest rate on one-year tenor loans to Small, Medium-scaled Enterprises in the country.
Per the report, indicative interest rate of 19.52%, 19.96% and 21.80% – the lowest three in the industry- on loans to SMEs for a tenor of one year were offered by FNB, United Bank of Africa (Ghana) and Universal Merchant Bank (UMB).
On the other hand, Societe General Ghana and CAL Bank offered the highest cost of credit of 28.95%, 29.50% and 30.38% on SME loans respectively.
For tenors of up to three years, the lowest lending rates for SMEs as charged is 19.96%, 21.80% and 22.44% respectively.
Conversely, Bank of Africa Ghana, Societe Generale and CAL Bank offered the expensive rates of 28.47%, 29.80% and 31.08% respectively.
Regarding loans to corporate institutions with a tenor of one year, Societe Generale, Stanbic and First National Bank offered the cheapest loans. They charged 15.60%, 16.48% and 18.71% respectively.
On the other hand, Consolidated Bank Ghana (26.22%) and CalBank PLC (26.33%) charged the highest rates.
With respect to the five years tenor, the lowest rates are as follows 17.67%, 20.10% and 20.25% which were offered to corporate organisations.
According to the BoG, the APR reflects the true cost of a loan that economic agents are confronted with when they go through an approval process to secure a loan facility.
The APR comprise the Ghana Reference Rate, bank-specific premia and other bank-specific charges.
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The BoG notes that the publication is for the attention of the public and also promote transparency in the pricing of loans granted by the universal banks.
Lending rate or interest rate is the amount charged by lenders for a certain period as a percentage of the amount lent or deposited. The total interest on the amount or the principal sum is determined by the duration of time over which the amount is deposited or lent. Most loans use simple interest.
Interest rates apply to most lending or borrowing transactions. Individuals borrow money to purchase homes, fund projects, launch or fund businesses, or pay for their education.
Businesses take out loans to fund capital projects and expand their operations by purchasing fixed and long-term assets such as land, buildings, and machinery. Borrowed money is repaid either in a lump sum by a pre-determined date or in periodic installments.
Also an interest rate can also apply to the amount earned at a bank or credit union from a savings account.
Read details of BoG report below:
APR for September 2021 Date Published November 23 2021 by Fuaad Dodoo on Scribd
