In this interview, The Banker reporter Francis Kajubi talks to NIC Bank Tanzania Limited, acting Managing Director, Mick Karima who addresses the subject and many others, excerpts:
Several commercial banks in the country have recently started lowering interest rates on loans to as low as 16 percent and extending repayment periods, what is your take on this trend?
The lowering of interest rates is a move in the right direction to boost a slowing economy and boost production. However, availability of liquidity to lend has been negatively impacted by the withdrawal of government deposits from commercial banks to the central bank which has resulted into the stagnated deposits interest rates compared lending rates. We would want to see lending rates fall further so that the economy can start firing again.
Interest rates paid by the majority of commercial banks on deposits is way too low compared to rates charged on loans that customers get from such banks, how does NIC Bank narrow this gap?
Interest rates paid on savings and other accounts tend to be low in general for a variety of reasons, however, interest rates on fixed deposits accounts of 6 to 12 months are quite high in the market. Our loan and deposit pricing take into account prevailing rates in the market, period and amount of the deposit and profile of the customer. Because of our strong liquidity position, our deposit rates are in line with the market and we want to keep it that way.
Bank of Tanzania recently called upon possible mergers and acquisitions struggling smaller banks in the market and you being a bank with only five branches in the country, how do you consider this idea?
Whilst we currently have only five branches in Tanzania, NIC Bank Tanzania Limited is part of NIC Group Plc which is a regional bank with 44 branches in Kenya and three in Uganda with an award-winning digital banking platform in the region. Incorporated in Kenya in 1959, the Bank’s evolution from an asset finance non-bank financial institution to a regional bank has been driven by its unwavering commitment to superior customer service and high corporate governance standards.
Given the above Group’s strength, we are able to grow organically in Tanzania and establish branch networks in key economic centers of the country. Having said that, we remain open to acquisitions that will fit into our strategic growth plans.
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