Investrust welcomes BoZ's 9% lending rates benchmark
By Joan Chirwa-Ngoma
Mon 02 Apr. 2012, 13:00 CAT
INVESTRUST Bank says BoZ's setting of benchmark lending rates at nine per cent will reveal the Central Bank's monetary policy stance.
Welcoming the development yesterday, Investrust Bank managing director Friday Ndhlovu said the Bank of Zambia's decision will signal to the market its intentions regarding money supply, inflation rate expectation and other market factors that help in the determination of lending interest rates by commercial banks.
The Bank of Zambia has set the country's inaugural benchmark interest rate at nine per cent in a policy shift intended to broaden financial markets and augment ongoing government efforts to lower lending rates.
Last Monday, it announced the introduction of a Policy Rate, named BOZ
Policy Rate, effective today, April 2, 2012, to replace the money supply targeting that has previously been its major policy tool.
The policy rate allows BoZ to clearly signal its monetary policy stance to the market, providing financial market participants with a credible and stable anchor for setting of interest rates on their credit products.
The economic indicators that would guide BoZ Policy Rate adjustments, include, among others, output, expected inflation and the exchange rate.
"However, for it to succeed, government policy must be consistent and this must reflect in the intentions signalled by the central bank through the policy rate so as to avoid volatility in interest rates and other economic variables such as inflation. Interest rates volatility and unstable inflation would cause foreign players to shun the Zambian financial market due to high uncertainty risk," Ndhlovu said in an emailed statement issued by the bank's public relations manager Ackim Mwale.
"This could cause significant turmoil in the financial Market and could be difficult to reverse in the short term as has been the case in other markets that have adopted similar policies."
Ndhlovu warned that without consistency in policy direction, pricing for term lending would prove difficult for both lenders and borrowers as they would be unable to price the expected volatility with reasonable certainty.
"This is because the policy rate is determined using short term variables and in this case the policy rate will be reviewed monthly. It follows therefore that one can only be certain over a one month horizon," said Ndhlovu.
"Nevertheless, it will help to make interbank activity more efficient and transparent. For the public, it is important that the policy rate is not construed as the rate at which the borrowing public will access credit but is an indicative rate at which commercial banks will transact amongst each other and borrow at from the Central Bank as lender of last resort, within prescribed margins. This rate will be reviewed monthly depending on what the Central Bank wants to achieve as they implement monetary policy. Commercial banks will add their own margins which will vary from client to client depending on perceived risk."
Labels: BOZ, FRIDAY NDHLOVU, INTEREST RATES, INVESTRUST BANK PLC, LENDING RATES
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Investrust’s loan to Zambian Airways was purely commercial – Ndhlovu
Written by Joan Chirwa
Monday, May 11, 2009 11:46:08 PM
INVESTRUST Bank's decision to lend money to Zambian Airways was purely a commercial undertaking, managing director Friday Ndhlovu has said.
And Investrust Bank deputy managing director Richard Phiri explained that Zambian Airways was committed to paying back the US $1.3 million loan acquired from the Bank.
During its annual general meeting in Lusaka on Friday, Ndhlovu said the issue surrounding Investrust Bank’s loan to Zambian Airways was partly political and commercial.
He was responding to a question from one of the bank’s shareholders who wondered why Investrust loaned Zambian Airways money even when the airline was in a financial crisis.
“We gave a loan to Zambian Airways after analysing the financial difficulties the airline was in before releasing the loan,” Ndhlovu said. “Banks are there to deal with issues such as financial difficulties. We gave conditions to the airline which were supposed to met; one of issues we agreed on was that Zambian Airways should clean up its balance sheet. Another condition was that the CEO, Mr Mutembo Nchito, should resign. Mr Nchito was in fact in the process of resigning at the time the airline suspended operations in January.”
Ndhlovu indicated that Zambian Airways had started repaying the loan up to the time of suspension of its operations.
And Phiri said it was wrong for people to treat the Zambian Airways loan as non-performing because the airline had started liquidating the debt until the time of suspension of its operations in January.
“All repayments were on schedule - the current exposure is about US $900,000,” said Phiri. “The bank is now awaiting an initial report from the receiver since the airline is under receivership, and after that, we will determine the way forward.”
Zambian Airways, in 2007, acquired a US $5.5 million loan from Investrust, Development Bank of Zambia (DBZ) and Intermarket Banking Corporation, with Investrust being the lead institution that syndicated the loan.
Labels: FRIDAY NDHLOVU, ZAMBIAN AIRWAYS
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Mutati, Rupiah differ over single sourcing of investments
Written by Edwin Mbulo in Livingstone
Tuesday, January 20, 2009 7:41:06 PM
COMMERCE minister Felix Mutati yesterday said single sourcing of investments into the country is a risk, saying the government will also look at America and Europe.
Mutati’s remarks were contrary to President Rupiah Banda's statement before he left for Libya on Sunday that the government is looking to Chinese and Indian investors for investments in the mines.
During a reception after opening Investrust Bank Livingstone branch, Mutati said the government will give support to indigenous banks in order to achieve the 5 per cent Gross Domestic Product (GDP).
"Single sourcing is too risky and we will go beyond India and China and look at the Americas and Europe as a way of distributing the risk in investment. It will be difficult but we have the guts," he said.
Mutati further urged the private sector to take advantage of the government's role of creating investment opportunities.
“My role as government is to create opportunities and your role as private partners is to seize the opportunities so that we realise the vision 2030,” said Mutati.
And Investrust Bank Plc managing director Friday Ndhlovu said the financial sector had experienced tremendous challenges in the past year but remained confident that his bank would survive.
Ndhlovu said Livingstone, being a historic town, was also an important trade hub bordering Botswana and Zimbabwe.
“It is a critical entry point and trade route into Zambia with Kazungula dry port which accounts for a significant portion of import and export traffic in and out of Zambia,” he said.
Ndhlovu added that the bank’s assets had grown to K451 billion as at November 2008 as compared to K419 billion for the same period in 2007.
Labels: FELIX MUTATI, FRIDAY NDHLOVU, INVESTMENT, INVESTRUST BANK PLC, RUPIAH BANDA
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Investrust MD calls for policies that encourage indigenous bank ownership
Written by Florence Bupe
Friday, January 16, 2009 5:01:15 AM
INVESTRUST Bank Plc managing director Friday Ndhlovu has called on the government to encourage Zambian ownership of banks through conducive policies.
And Ndhlovu has disclosed that the bank was in consultation with international organisations to try and outsource funds for increased lending portfolio.
Speaking during the signing ceremony of the collective agreement between Investrust Bank and unionised staff under the Zambia Union of Financial, Industrial and Allied Workers (ZUFIAW) on Wednesday, Ndhlovu said the government needed to put in place policies that would encourage the growth of the financial sector through indigenous ownership.
“We have been approached by many banks asking to buy us out, but we have always turned down these offers,” Ndhlovu said. “We want to continue being an indigenous Zambian bank, and government must put in place policies that will increase the ownership of banks by Zambians.”
And in an interview, Ndhlovu said although the bank had not been entirely spared by the global financial crisis, mitigation measures had been instituted to ensure that it continued to grow.
“As a bank, we have continued to grow, though at a lesser rate. To ensure our continued growth, we have put in place measures to increase our share of the loan market,” Ndhlovu said. “We are trying to access credit from international organisations in a bid to increase our loan portfolio.”
Ndhlovu also said the bank was increasing its presence in the country as a means of raising the level of business.
He also said the bank was trying to control its operational costs in a bid to stabilise lending rates.
He expressed hope that the country’s inflation rate, currently standing at 16.6 per cent, would be contained and possibly reduced, to lower the chances of increased lending rates.
Labels: BANKING, ECONOMIC EMPOWERMENT, FRIDAY NDHLOVU, ZUFIAW
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EIB lends 20m euros to local banks for SMEs
Written by Fridah Zinyama
Thursday, November 27, 2008 11:58:35 AM
(EIB) is lending 20 million euros to five commercial banks in Zambia to support investments by small and medium scale enterprises (SMEs).
And commerce minister Felix Mutati said Zambia needs a stimulus plan to address the financial effects of the credit crunch that the international market is experiencing.
Meanwhile, Investrust Bank managing director Friday Ndhlovu has commended the European Investment Bank for providing finances to five commercial banks in Zambia as liquidity had become a major constraint in the banking sector worldwide.
The five commercial banks that would benefit from the financing agreement with EIB are Standard Chartered Bank, Stanbic Bank, Finance Bank, Investrust Bank and Africa Banking Corporation.
During the signing of the financing agreement between EIB and the five commercial banks in Lusaka yesterday, EIB Head of the Southern Africa and Indian Ocean Division, Serge Klumper, said the loan would have an important developmental impact on Zambia as it would encourage growth in the private sector.
“Accessing long term finance has been a major challenge for most of the SMEs in the country and we hope that funds that EIB is loaning to the five commercial banks will go a long way in improving the situation,” he said. “We have decided not to set the interest at which the banks will pay back the loans because experience has taught us that it makes it difficult for them to pay back the loans.”
Klupmer said the loans were being provided at very competitive interest rates and were meant for long term financing which goes up to ten years.
“Most importantly, these funds will go towards diversifying Zambia’s economy which is highly dependent on copper and will create jobs for local communities across Zambia,” said Klupmer. “This project is also supported by the Zambian government and will be used to finance investments by small companies from a wide range of sectors including industry, agriculture, tourism and infrastructure.”
And Mutati said the funds would go towards Zambia’s stimulus plan which needed to be urgently implemented because of the financial shock that the world was currently experiencing.
“As government, we would like to continue with policies that are going to ensure that a good business environment is created where business can be freely conducted,” said Mutati.
And Ndhlovu, who gave a vote of thanks on behalf of the five commercial banks, said the Zambian economy needed more funds for its continued growth.
“We are optimistic that the Zambian SMEs will greatly benefit as the funds come with favourable interest rates, longer repayment periods and the currency choice of disbursement to support export trade,” he said.
Ndhlovu said Zambia had for a long time not had access to long term financing, adding that the 20 million euros would therefore provide the much needed leverage for the growth of the SMEs.
Labels: EIB, FELIX MUTATI, FRIDAY NDHLOVU, FUNDING, INVESTRUST BANK PLC, SMEs
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Ndhlovu bemoans speculative activities in capital markets
By Kabanda Chulu
Tuesday May 13, 2008 [09:00]
LUSAKA Stock Exchange (LuSE) chairman Friday Ndhlovu has expressed concern over the increase in speculative activities that are creating a downward turn on the LuSE all share index. And Ndhlovu has dismissed assertions that the speculative activities could be a result of insider trading on Zambian capital markets.
During a media briefing yesterday in Lusaka, Ndhlovu said there was an increase in the activities of speculators in the market especially since the Copperbelt Energy Corporation listing that has led to panic selling by other investors.
“In turn this has created a downward turn on the LuSE all share index and we would like to encourage investors to review their investment positions and transact over the exchange in accordance with their own investment strategy and not hearsay,” Ndhlovu said.
“While share prices may rise or fall, the gains or losses are only realised when investors sell their shares, hence reactive decisions may not necessarily be in the best interest of the selling or buying investor.”
He said over the last six weeks, the market had noticed increased activity whereby investors were exiting from one listed entity to acquire shares in the opportunities.
“The impact of this has been an overall reduction of the LuSE share index from 4,649 in March 2008 to 3,902 this month May, thus resulting in a 16 per cent decline,” Ndhlovu said. “However, we want to assure the public that the market will realign itself once the ongoing corporate action has settled and we hope that new listings will enhance liquidity and provide investors with additional options.”
When asked if the speculative activities were fuelled by insider trading, Ndhlovu said there was no insider trading on the Zambian capital markets.
“Speculation should be avoided because it affects the share index since investors exit anyhow but there is no insider trading and all decisions are based on public information,” said Ndhlovu. “And since it does not exist, there are no measures in place to prevent it.”
Insider trading is when people inside capital market institutions such as LuSE and stockbrokers disclose information not supposed to be known by the public, resulting in speculative buying.
Labels: FRIDAY NDHLOVU, LUSE
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