Low returns in savings compared to high interests on loans imposed by commercial banks were the object of a heated debate in the National Assembly last week. After the Minister for Finance, Trade and Economic Planning had presented the budget for 2017, Members of the National Assembly (MNAs) from both the ruling party and opposition asked that commercial banks review their interest rates as part of the government’s effort to alleviate poverty.
Some banks seem to have responded positively to the demand as they have this week announced an increase in interest on savings and a decrease in interest on mortgage loans. While the two banks which are partly government owned – Seychelles Commercial Bank (SCB) and Nouvobanq – have taken the lead by already announcing changes, others have said that they will follow suit as from next week.
SCB yesterday announced that it had reviewed interest on savings accounts from 2.75 to 3.25%, while that for mortgage loans had decreased from 9 to 7.90%. Corporate and Small and Medium Enterprise (SME) head Philippa De Charmoy Lablache has said that the bank had been considering the changes for some time now, as a result of complaints from customers and proposals from shareholders. She has however explained that as a small bank which is only rated 4th locally, it was difficult to apply them due to high fixed costs and low profit.
“Only from 2015 we started recording a rise in profit. Figures for 2016 show that the bank has performed better than in 2015, so it is logic to pass on the benefit to customers,” she said.
The SCB has promised that as long as it continues to make profit, it will give its shareholders and customers a better return on investment and a better deal on savings.
In the case of Nouvobanq, interest on mortgage loans has dropped from 9 to 7.5%, while on savings it has risen from 3.25 to 3.5%. Credit officer Kenneth René has explained the change as a “strategic decision to match the market reality”.
He added that the bank has felt that the market currently permits better interest rates and that future decisions will also depend on market evolution.
Among the main commercial banks, two have expressed the intention of reviewing their interest rates soon for the benefit of their clients. Those are Baroda and Habib Bank.
“As a bank, we have to reply to the country’s requirements and also adapt to competition from other banks. If we do not change, we will not be competitive and will lose clients. We will announce our decision next week,” a spokesman from Baroda has said.
In the case of Habib, which says it responds to market conditions and demand from government and the National Assembly, it will announce the changes during the first quarter of 2017.
As for Barclays and Mauritius Commercial Bank, their interest rates remain unchanged for the moment, with no decision taken for the future. Rates for the latter stand at 11.5% for personal loans, 13.5% for vehicles and 13% for housing.