Illustration: AIM<\/p>\n
Mozambican Association of Banks (AMB) has decided to keep the Prime Rate of the country\u2019s financial system at 15.50 percent during the current month of July.<\/p>\n
The prime rate is a benchmark interest rate used by commercial banks as a baseline to determine the cost of borrowing for their customers. It influences interest rates for various loans, including credit cards, lines of credit, and adjustable-rate mortgages.<\/p>\n
It results from the sum of a Single Index of 9.30 percent, calculated by the Bank of Mozambique, and from the Cost Premium of 6.20 percent, defined by the association itself.<\/p>\n
The Single Index is calculated monthly by the Bank of Mozambique based on operations carried out in the interbank money market, while the Cost Premium is updated quarterly and reflects factors such as Mozambique\u2019s sovereign risk, the non-performing loan ratio, cured credit, and the reserve requirements demanded from banks.<\/p>\n
In a statement, AMB explains that the maintenance of the rate means there has been no relief in the cost of money for those intending to seek bank credit, which means \u201cfinancing conditions remain tight, both for families seeking housing or consumer credit and for companies that depend on banks to finance investments or reinforce cash flow.\u201d<\/p>\n
Although the Prime Rate is 15.50 percent, this does not correspond to the final rate charged to customers. On top of this percentage, each bank applies a spread, defined according to the risk of the operation, the customer\u2019s history, and the type of financing requested. In practice, it is this margin that varies the effective cost of credit among different financial institutions.<\/p>\n
\u201cIn housing credit, for example, the spread varies between 1 percent, applied by Standard Bank, and 6 percent, applied by Vista Bank and First Capital Bank. This means that, depending on the institution, the cost of credit for home purchases can easily exceed 20 percent\u201d, reads the document.<\/p>\n
The differences repeat in consumer credit and corporate financing. Some banks apply relatively low spreads, while others present significantly higher margins, making the cost of credit significantly more expensive. This reality reinforces the importance of comparing conditions offered by different institutions before contracting a loan.<\/p>\n
For the business sector, the permanence of the Prime Rate at its current levels continues to represent an obstacle to investment. In a context where many companies seek to expand production, acquire equipment, or increase working capital, the high cost of credit ultimately reduces investment capacity and increases financial burdens.<\/p>\n
The statement also notes that despite the monetary policy rate (MIMO) being fixed at 9.25 percent, the benchmark rate used by banks remains well above that level due to the weight of the Cost Premium, an indicator that incorporates the risks associated with banking activity and the country\u2019s economic environment.<\/p>\n
\u201cAs long as the indicators that determine the benchmark rate do not show a favorable evolution, bank financing is expected to continue representing a significant burden for anyone intending to invest, expand a business, or carry out personal projects\u201d, reads the document.<\/p>\n
Source: AIM<\/p>\n","protected":false},"excerpt":{"rendered":"Illustration: AIM Mozambican Association of Banks (AMB) has decided to keep the Prime Rate of the country\u2019s financial…\n","protected":false},"author":2,"featured_media":536736,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,61,60],"class_list":["post-536735","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-ie","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/536735","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=536735"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/536735\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/536736"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=536735"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=536735"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=536735"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}