SA Bank says it will raise interest rates by as much as 1% for its loans
SA Bank has said it will hike interest rates for the first time in more than three years and it expects to add as many as 1,200 new employees to the bank’s staff.
The Bank of South Africa said on Thursday it would increase the average interest rate it charges on existing loans to 5.8 per cent from 4.5 per cent, which will take effect from April 1.
“We’re going to make a decision on our lending and it will be the first of the year,” SA Bank managing director Sihong Lee said in an interview.SA Bank has faced criticism from its critics for being too dependent on government funds, and for being slow to boost lending to poor areas.
It has also faced criticism for its poor service for consumers.
It had warned on Wednesday that it may cut or postpone lending to the black market, citing the recent shortage of loans and lack of a market for foreign exchange.
“For us, it’s not about profitability, it is about quality of service.
And that is what we have to work on,” Lee said.
He said the bank would continue to cut rates, and that interest rates will be adjusted by the bank when rates are expected to rise.
“There will be adjustments,” he said.
“That will be based on a number of factors, and what we can see on the ground.”
He said that the bank was now focusing on building the country’s infrastructure.
“We’re trying to increase the supply of services in a way that will enable the country to live and work,” Lee added.
The bank will also launch an online platform to help people find loans and mortgages.
“This will be an essential tool for borrowers and their families to access credit,” Lee told reporters.
“The online platform will allow borrowers to see if their loan is in default and help them determine whether they have to repay their loan or refinance.”
The bank’s loan-to-value ratio has declined since the end of 2013 to below 6.5 percent from 7.1 percent.
“We are on a path to becoming a more efficient lending institution and we have a very strong team of people who are ready to take on these new challenges,” Lee continued.
The banking industry is struggling as more and more borrowers are forced to borrow from the black economy.
As part of its efforts to help the country become more self-sufficient, the government has launched a range of schemes to help businesses, particularly small- and medium-sized enterprises, pay back loans.
The South African Development Community (SADC) has pledged $2 billion over five years to build more schools, hospitals and roads.
But it has been accused of being too cautious in its response to the worsening economy.