Barclays links high interest rates to low personal savings

Barclays links high interest rates to low personal savings
By Mwila Chansa in Kitwe
Mon 02 Nov. 2009, 04:00 CAT

BARCLAYS Bank Zambia PLC retail director Simangolwa Shakalima has observed that the lack of boom in personal savings has had a big impact on the interest rates that banks charge on loans.

In an interview during the Barclays Bank Copperbelt customer loyalty breakfast meeting at Arabian Nights in Kitwe on Friday, Shakalima however said the culture of personal savings had been improving overtime although not consistently.

"As an economy, we have seen an improvement in people changing their culture of savings. Predominantly, we've not had a boom in savings especially at personal level but the situation has been improving overtime though it has not been very consistent," he said.

Shakalima noted that with improved personal savings, the country would see a huge impact on interest rates since savings had a bearing on how much banks charged in terms of interest on loans.

He said Barclays Bank was always alive to the financial environment in the country and tailored its interest rates in response to what the fundamentals dictated.

Shakalima said the Bank was constantly reviewing its interest rates depending on the economic environment.

"Suffice to say, there are lots of factors that determine interest rates; factors like costs and availability of funds," he said.

"Notwithstanding, we have demonstrated that when the economy dictates that interest rates come down, we behave accordingly."

And Shakalima said although there had been volatility in interest rate charges, the country had reached a stage where the volatility was stabilising.

He observed that during the years 2007 and 2008, the interest rates significantly dropped because of the economic performance at the time.

"To a large extent, certain indicators like inflation will tell you where the cost of borrowing money is going," said Shakalima.

He also observed that although the government had put in measures to reduce the general cost of doing business in the country, there was a lag in terms of reaping benefits as most of those initiatives could only bring benefits in the medium to long term.

Meanwhile, Barclays board member Martin Broome said Barclays was geared to play a leading role in economic re-awakening of the Copperbelt envisaged to take place in view of improved copper prices.

He said despite the challenging times, the Copperbelt was key to the overall economy of Zambia, further predicting that the province was poised to witness major investment initiatives.

Broome added that the projected economic rejuvenation presented an opportunity for Barclays to continue supporting its retail customers and the business community in general.