Lower interest
on banking loans
Reference rate cut to 8.5 percent

on dollar and 11.5 percent on lira

Share on Facebook     Share on LinkedIn        
WatsApp
The Association of Banks (ABL) has cut the Beirut Reference Rate (BRR) on lending in dollars to 8.5 percent from 9.35 percent.

It lowered the BRR on lira loans to 11.5 percent from 12.45 percent.

The ABL has asked the banks to apply the new rates starting from the current month. The BRR is issued by ABL periodically as a recommendation addressed to the banking sector.

The BRR is a benchmark rate based on the average cost of funds to banks. It is used by banks for the calculation of the actual rates they apply to each client’s case, after adding a credit risk premium and a profit margin.

Makram Sader, Secretary General of ABL, said that the gradual reductions in the BRR reflect the decision of the Central Bank (BDL) to put ceilings on interest rates paid by banks on new deposits or deposits renewed after Dec. 5, 2019.

The upper limits set by BDL in December on interest rates were five percent for deposits in foreign currencies and 8.5 percent for deposits in lira. The Central Bank said that these exceptional measures, which are valid for six months, aim to preserve the value of deposits amid the exceptional circumstances. BDL had also instructed the banks to lower the BRR accordingly.

The weighted average interest rate on loans in lira dropped to 9.69 percent in November from 11.19 percent in October. The reverse happened with the corresponding rate on lending in dollars which increased to 10.64 percent in November from 10.05 percent in the previous month. The increase in interest rate on the dollar, which is usually lower than the rate on the lira, reflects the surge in demand for dollars amid bank restrictions on withdrawals in foreign currencies. Some banks were charging exorbitant rates on overdrafts in dollars.
Reported by Shikrallah Nakhoul
Share on Facebook     Share on LinkedIn        
WatsApp
Date Posted: Jan 20, 2020