BANK Windhoek yesterday said it would drop its prime lending rate by 50 basis points to 10,75 per cent, becoming the first commercial bank to meet the Bank of Namibia’s (BoN) demand for a lower interest rate spread.
The new interest rate will become effective on Thursday.FNB Namibia, Nedbank Namibia and Standard Bank Namibia have until October 31 this year to follow suit.In a statement released yesterday, Bank Windhoek said the decision to drop its prime rate was taken in light of the start of its new financial year last Thursday and ‘follows the comprehensive annual review of its fees and charges which became effective July 1 2010’.The bank did not increase all its fees across the board and also did not apply the same percentage fee increase to all its products and services. Increases vary between 4,5 per cent and 6,5 per cent. Fees that have been free of charge up to now, remained so.Bank Windhoek Managing Director James Hill said the 50 basis points reduction in the prime lending rate ‘will give an additional incentive to businesses and households alike to increase their appetite for bank credit, which in turn would be good for overall economic development’.The bank, however, left its home loan rate unchanged at 11,75 per cent.Former BoN governor Tom Alweendo last May gave the banks an ultimatum to reduce the gap between the central bank’s repo rate and the prime rate, known as the interest rate spread. Alweendo said the then rate spread of 475 basis points could not be justified when compared to similar economies, and wanted a spread of 375 basis points.Governor Ipumbu Shiimi, who took over from Alweendo, recently said that the October deadline stands.
