Stanbic Bank, the biggest commercial bank in Uganda, has cut its prime lending rate to 18 per cent from 19 per cent per annum, making the bank the cheapest commercial lender in Uganda so far.
“We are pleased to announce that Stanbic Bank is reducing its prime lending rate in line with prevailing marketing conditions,” the bank says in the latest statement.
The new lending rate, Stanbic Bank said, would become operational effective August 1, 2017, and apply to both existing and new customers.
Stanbic’s move to cut down the lending rate is expected to force its competitors to revise their rates downwards as the players struggle to capture customers in the narrow market, where most target salaried workers and organised businesses.
Stanbic’s lowering of the lending rate follows the Bank of Uganda’s reduction of the Central Bank Rate (CBR) to 10 per cent in June from 11 per cent in April. When BoU reduces its CBR, it expects commercial banks to lower their lending rates to attract investors to borrow.
The BOU governor Prof. Emmanuel Tumusiime-Mutebile has always said he wants wants commercial banks to cut their lending rates so as to reflect the market conditions.
Latest industry figures show that on average Ugandan commercial banks charge 22.5 per cent interest on loans absorbed.
Housing Finance Bank, Bank of India and United Bank of Africa are the other cheap commercial lenders on the Ugandan market, lending at 19 and 20 percent, respectively.
On the other hand, according to BOU, NIC Bank and Commercial Bank of Africa are the most expensive, lending at 25 percent and 23 percent, respectively.
