Depositors daunted by minuscule returns on savings - Bank of Guyana

Depositors daunted by minuscule returns on savings — Bank of Guyana

Oct 03, 2018 News

…Says high lending rates deterring potential clients, investment opportunities

According to Central Bank, the nation’s depositors are daunted by minuscule returns on savings. High lending rates are deterring potential clients and investment opportunities. And existing borrowers are faced with high-cost burdens.

Central Bank Governor, Dr. Gobind Ganga

The Bank of Guyana said that this state of affairs has led to some loans underperforming especially during economic downturns, which eventually affects banks’ profitability. The Bank believes that this calls for better assessment of the savings and lending rates with a long-term trajectory in improving not only profitability, but also including the robustness of the economy.
In addition, Central Bank believes that healthy competition among banks needs to be encouraged.
Bank of Guyana said that the stock of Non Performing Loans (NPLs) increased by 3.5 percent. Bank of Guyana said that relative improvements in the repayments of loans were primarily by the business sector for agriculture, mining and quarrying, and manufacturing.
However, wholesale and retail entities’ NPLs made an upswing. In addition, NPLs for households continues to intensify, and have raised cause for concern, the Bank of Guyana said.
It was only last year that Finance Minister , Winston Jordan reported that lending by banks continues to be hampered due to a high level of nonperforming loans in the system.
The economist noted in his half year report that commercial banks remained well-capitalized, in the first half of 2017, with a capital adequacy ratio of 26.6 in June 2017, compared to a ratio of 25.8 in June 2016.
However, nonperforming loans increased from 11.9 percent in June 2016, to 13.1 percent in June 2017, with 61 percent of this increase concentrated among business enterprises. (KIANA WILBURG)