The Bank of Ghana’s ‘Average Lending Rates of universal banks as 31st July 2021′ has revealed that Agricultural Development Bank (ADB) Ghana currently has the highest lending rate in the country.
According to the data from Bank of Ghana (BoG) , ADB charges an average lending rate of 24.89 percent. This is the highest among the 23 universal banks currently in the country.
The cost of borrowing from Agricultural Development Bank is greater than the banking sector’s average of 20.61 percent as at end of June this year 2021, per the data from BoG.
This shows that ADB’s lending rate is 428 basis points more than the average lending rate of the banking sector. Also, ADB’s lending rate is 11.09 percentage points greater than the Ghana Reference rate of 13.80 end-June 2021.
Despite ADB offering loans at a higher rate, one possible reason that may account for the bank’s decision is the risky nature of agriculture in Ghana. For instance, when there is an outbreak of crop disease or animal disease such as ‘Bird Flu,’ it may affect the farmer’s production. As a result, it will be more likely for the farmer to default supposing he acquired a loan for the business.
Furthermore, the level of non-performing loans may partly explain why ADB charges a higher lending rate. Recent data from the Bank of Ghana show that the rate of non-performing loans in banks’ portfolio has experienced an upward movement since last year June 2020. The level of non-performing loans increased from 15.7 percent end-June 2020 to 17.0 percent this year June 2021. This means that between 12 months, non-performing loans have risen by 130 basis point.
Overall, these reasons may justify why, even though the banking industry lending rate is 20.6 percent, ADB however, offers a higher lending rate.
After Agricultural Development Bank, Societe General Ghana charges the second most-expensive lending rate of 23.61 percent as at end of July 2021, according to Bank of Ghana.
CALBank offers the cheapest lending rate
CALBank offered the cheapest lending rate of 15.97 percent among all the universal banks in the banking industry as at end July-2021.
Comparatively, CALBank’s lending rate is 8.92 percentage points smaller than that of Agricultural Development Bank.
This could mean that the right go-to bank for any individual in search of loan at the lowest cost, is CALBank.
Similarly, Guaranty Trust Bank (GT-Bank) offered the second cheapest lending rate of 16.97 percent, representing 100 basis points higher than that of CALBank. Also, GT-Bank’s lending rate is 3.64 percentage points lesser than the average lending rate of 20.61 percent of the banking industry.
The data from the Central Bank further indicates that United Bank for Africa (UBA), Zenith Bank, OmniBSIC Bank, Access Bank, Ecobank and Bank of Africa collectively offered average lending rates that fell between 17.0 percent and 20.0 percent.
This implies that these banks charged lending rates lower than the banking sector average of 20.61 percent.
Meanwhile, all the other banks including GCB Bank, Consolidated Bank Ghana (CBG), Absa Bank Ghana, among others offered lending rates that are greater than 20.0 percent but less than 23.60 percent.
Read Also: Payment card companies to localize card transaction – Bank of Ghana
