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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ADB completes line of credit to Zanaco, Investrust
By Mutale Kapekele
Sat 30 Oct. 2010, 04:00 CAT
THE African Development Bank has completed its US$ 13.5 million Line Of Credit (LOC) to Zanaco and Investrust banks which will be used to finance small and medium enterprises (SMEs) development.
Zanaco and Investrust banks have accessed US$ 10 million and US$ 3.5 million respectively for the five-year SME initiative that is expected to enhance the sector’s access to finance on more favorable terms.
During the launch of the SME initiative, ADB resident representative Dr Freddie Kwesiga said despite his bank investing US $1 billion since coming to
Zambia in 1971 and the current support of US $200 million, there was still a deficit in financing the private sector, especially SMEs.
He said the SME was an important sector to any economy as it employed many of the marginalised groups in society like women and youths.
Dr Kwesiga said his bank was committed to supporting Zambia’s development agenda by providing assistance in infrastructure development, regional integration and private sector development.
“The bank’s sectorial focus will include agriculture, energy, power and transport, hinged around national economic diversification programme,” Dr Kwesiga said. “Linked with the sectors I have mentioned, to the private sector we will focus on leveraging sector resources through supporting Private
Public Partnerships (PPPs), deepening financial intermediation in the financial sector to catalyse development of mortgage financing and support to SMEs through lines of credit as well as supporting reforms to provide reforms that provide wider competiveness and improved business environment.”
Dr Kwesiga said Zambia had a lot of opportunities to reduce poverty through PPP initiatives and partnerships with cooperating partners.
Labels: ADB, INVESTRUST BANK PLC, ZANACO
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Investrust predicts fall in lending rates
By Chiwoyu Sinyangwe
Tue 11 May 2010, 04:00 CAT
INVESTRUST Bank Plc sees lending rates by commercial banks in the country coming down this year, buoyed by projected low annual inflation rate and continued collapsing yields on government securities, deputy managing director Richard Phiri said last week.
And Phiri said Investrust Bank Plc believes the global economic crisis is not yet over and the bank will remain cautious in extending the lending line to the private sector.
In an interview last week, Phiri said the projected lower inflation rate in the country and increased competition among commercial banks in the country was expected to lower the cost of lending.
Phiri said the continued collapsing of yields in the government securities would also give commercial banks in the country enough room to reduce the cost of lending.
“I see lending rates reducing progressively during the year because of many factors. If you look at the yields on government securities, which at the moment, are as low as three per cent,” Phiri said.
“Obviously that means anyone looking at investing…the cost of deposits must also come down because when ‘I have a liability portfolio, I would like to look at alternative investment for my depositors. So, whatever returns I give which I realise that whatever other better returns than government securities, I must always monitor the fact that my depositors are happier lending to me than taking it to the Central Bank in government securities because government securities yields have come down substantially, and as banks, we are now able to reduce the rates that we are paying on the various investments.”
He said the reduced annual inflation rate would help the banks deal with wholesale lenders.
“And obviously, as they investments mature, we are renegotiating these rates downwards. So, overall, it will lead to a reduction in the cost of, particularly, wholesale deposits,” he said.
“This is what should help because once the average cost of funds go down, banks will have room to work on their margins and reduce the cost of lending rates. This year, I can see signs are already there…every bank is reducing the base lending rates. Of course, that is not the key determinant of effective rate of lending but I can see that there will be a gradual reduction towards the end of the year.”
Phiri said there was need for the government to maintain a lower annual inflation rate in the country through making the country consistently enjoy the positive Balance of Payment (BoP) position.
“I believe that Zambia should move towards achieving a positive BoP, that is only way we are going to reverse issues of inflation,” he said. “Until you achieve net exporter position, it will be very difficult to manage these variables.”
And Phiri said although Investrust Bank Plc sees 2009 as exciting for the growth, the bank will remain cautious as it believed the global economic crisis which ripped markets apart in 2008 and 2009 was not yet over.
“The economic crisis effects are still on the cards. We do not believe that the crisis is over completely,” Phiri said.
“We are still very careful but not risk-averse; otherwise we would not be making money…but we are very carefully selective on the risk that we put on our balance sheet as we are monitoring the trends both in the local and global market. But for us as a bank, 2010 looks quite exciting.”
Phiri explained that Investrust Bank Plc was not among the worst-hit banks by the secondary effects of the global economic crisis which hurt the country through reduced mining activities after international copper prices collapsed between 2008 and 2009.
Phiri said the recovery of the international copper prices was expected to positively impact the operations of Investrust Bank Plc.
“We took carefully calculated strategy in that we were not overly exposed to key sectors of the economy that were affected by global economic crisis, one of them, mining,” said Phiri.
“We didn’t have a significant exposure to the mining sector. So, we had a natural shock absorber…we had a very well balanced portfolio. Whilst the entire sector was affected by bad loans coming out of these particular sectors, ours was modest in the sense that our loan loss provision only increased from about K7 billion in 2008 to K9 billion in 2009…we had an increase of K2 billion. On percentage basis, our loan portfolio did not grow as we had envisaged because of the economic crisis.”
Phiri said due to the economic crisis, Investrust Bank Plc last year slowed down on lending to make sure that it was calculating and understanding the risk that it was taking.
“…The loan loss provision as a percentage of the loan portfolio increased from about seven to 13 per cent at the end of 2009,” said Phiri.
“It was reflective of the trends in the industry because industry ratios grew from about six per cent to 14 per cent at the end of 2009. We think that by and large, we managed our risks and we performed well despite the many shocks that were experienced in the industry world over.”
Labels: INVESTRUST BANK PLC, LENDING RATES, RICHARD PHIRI
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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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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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Investrust $3.5m for SME loans
Written by Kabanda Chulu
AFRICAN Development Bank (AfDB) has given Investrust Bank plc US $ 3.5 million line of credit for onward lending to local small and medium enterprises (SMEs) in Zambia.
And governments and businesses in Djibouti, Nigeria, Zambia, Mali and Malawi would benefit from a combined multi-purpose funding of US $ 187 million approved yesterday by the AfDB board of directors in Tunisia.
Releasing the disbursement schedule, AfDB senior communications Officer Felix Njoku stated that Investrust Bank would receive a US $3.5 million line of credit for lending to local SMEs.
He stated that Investrust would also benefit from a US $15,000 technical assistance grant to provide support to SME associations and business development service providers in the country.
“Similarly, a US $10 million line of credit and a US $8 million contribution toward a US $10 million AfDB-USAID partial credit co-guarantee facility was approved for Zanaco Bank of Zambia for the benefit of target SMEs and an associated technical assistance package of US $25,000 will enable Zanaco and Investrust banks, SMEs, and business service providers in Zambia to build capacity,” stated Njoku.
Last August, AfDB president Donald Kaberuka and finance minister Ng’andu Magande signed an agreement for a grant of US $ 500,000 to provide relief to victims of recent flash floods.
The funds will be managed by Zambia’s Disaster Management and Mitigation Unit and the World Food Programme (WFP), which has been supporting various agriculture projects in Zambia.
Currently, the AfDB’s active portfolio in Zambia stands at US $ 220 million and mainly comprises agriculture, water and sanitation, health, education and multi-sector budget support.
Labels: AfDB, CREDIT FACILITIES, INVESTRUST BANK PLC
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AfDB gives Investrust $3.5m for SME loans
Written by Kabanda Chulu
AFRICAN Development Bank (AfDB) has given Investrust Bank plc US $ 3.5 million line of credit for onward lending to local small and medium enterprises (SMEs) in Zambia.AFRICAN Development Bank (AfDB) has given Investrust Bank plc US $ 3.5 million line of credit for onward lending to local small and medium enterprises (SMEs) in Zambia.
And governments and businesses in Djibouti, Nigeria, Zambia, Mali and Malawi would benefit from a combined multi-purpose funding of US $ 187 million approved yesterday by the AfDB board of directors in Tunisia.
Releasing the disbursement schedule, AfDB senior communications Officer Felix Njoku stated that Investrust Bank would receive a US $3.5 million line of credit for lending to local SMEs.
He stated that Investrust would also benefit from a US $15,000 technical assistance grant to provide support to SME associations and business development service providers in the country.
“Similarly, a US $10 million line of credit and a US $8 million contribution toward a US $10 million AfDB-USAID partial credit co-guarantee facility was approved for Zanaco Bank of Zambia for the benefit of target SMEs and an associated technical assistance package of US $25,000 will enable Zanaco and Investrust banks, SMEs, and business service providers in Zambia to build capacity,” stated Njoku.
Last August, AfDB president Donald Kaberuka and finance minister Ng’andu Magande signed an agreement for a grant of US $ 500,000 to provide relief to victims of recent flash floods.
The funds will be managed by Zambia’s Disaster Management and Mitigation Unit and the World Food Programme (WFP), which has been supporting various agriculture projects in Zambia.
Currently, the AfDB’s active portfolio in Zambia stands at US $ 220 million and mainly comprises agriculture, water and sanitation, health, education and multi-sector budget support.
Labels: AfDB, INVESTRUST BANK PLC, SMEs
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AfDB gives Investrust $3.5m for SME loans
Written by Kabanda Chulu
AFRICAN Development Bank (AfDB) has given Investrust Bank plc US $ 3.5 million line of credit for onward lending to local small and medium enterprises (SMEs) in Zambia.
And governments and businesses in Djibouti, Nigeria, Zambia, Mali and Malawi would benefit from a combined multi-purpose funding of US $187 million approved yesterday by the AfDB board of directors in Tunisia.
Releasing the disbursement schedule, AfDB senior communications Officer Felix Njoku stated that Investrust Bank would receive a US $3.5 million line of credit for lending to local SMEs.
He stated that Investrust would also benefit from a US $15,000 technical assistance grant to provide support to SME associations and business development service providers in the country.
“Similarly, a US $10 million line of credit and a US $8 million contribution toward a US $10 million AfDB-USAID partial credit co-guarantee facility was approved for Zanaco Bank of Zambia for the benefit of target SMEs and an associated technical assistance package of US $25,000 will enable Zanaco and Investrust banks, SMEs, and business service providers in Zambia to build capacity,” stated Njoku.
Last August, AfDB president Donald Kaberuka and finance minister Ng’andu Magande signed an agreement for a grant of US $ 500,000 to provide relief to victims of recent flash floods.
The funds will be managed by Zambia’s Disaster Management and Mitigation Unit and the World Food Programme (WFP), which has been supporting various agriculture projects in Zambia.
Currently, the AfDB’s active portfolio in Zambia stands at US $ 220 million and mainly comprises agriculture, water and sanitation, health, education and multi-sector budget support.
Labels: AfDB, CREDIT FACILITIES, DMMU, FELIX NJOKU, INVESTRUST BANK PLC, SMEs, WFP
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