Centenary bank has assured its customers that its interest rates will come down soon, as the economy continues to recover from the 2011 slump.
Speaking at the Customers’ day at the bank’s headquarters, Kampala, on Friday, clients complained that high prime interest rates were eating into their businesses.
“We humbly request that the [interest] rates come down to at least 18 per cent. The current rate is too high; we have been pushed to the wall,” said Martin Kihembo, one of the customers.
The bank’s interest rate is at 21 per cent, which can be increased or decreased by a certain factor depending on the borrower’s risk profile. Even when the Central Bank Rate (CBR) – now 12 per cent – came down, customers fumed, the bank did not reduce lending rates to a convincing rate.
Experts, however, point out that lending rates may not immediately fall with the CBR, if banks still have to lend out money they borrowed when the interest rate was still high.
Last year, where economic conditions were considered hard, the bank made monstrous profit of Shs 54.6bn with its assets hitting Shs 1tn. Customers said they could have shared on the profits by having lower interest rates.
Managing Director Fabian Kasi said the bank was working to lower the rates.
“We have a lot of costs involved; it is not only the cost of money that determines the cost of the loan. Operational costs like staff salaries, visits to the borrowers [are counted],” Kasi said.
Centenary is regarded one of the cheapest banks, used by a quarter of the banked population – about 1.4m people. The bank holds customer days to get feed-back from them on how it can improve its services.
Customers posed many complaints including unreliable ATM services, cyber fraudsters, loans officers not giving them enough information, and arrogant staff members.
Meanwhile, Kasi said they had not considered opening physical branches outside Uganda. Centenary, though, has partner banks that its customers can use, including Cooperative bank in Kenya, CRDB in Tanzania and Ivory Bank in South Sudan.