Bank to reduce indicator lending rate


BANK South Pacific has announced a reduction in its indicator lending rate (ILR) of one per cent, to 10.1 per cent which will come into effect today.
The ILR is the base interest rate used by banks for all loan products they offer to borrowers.
Chief executive Robin Fleming said yesterday that this was in response to governor of Bank of PNG Loi Bakani signalling a change in Central Bank’s monetary policy settings as PNG’s economy adjusts to a business downturn due to Covid-19.
Fleming said BSP’s lending products that were linked to its ILR would be reduced by one per cent from today.
“Our first home owner housing loan will remain at four per cent per annum fixed. New personal loans and new smart business loans/SME loans will have a one per cent reduction in interest rate which in the case of personal loans will be 26 per cent,” he said.
“With lending rates reducing, BSP’s deposit rates will also be adjusted with term deposit rates being reduced depending on the term of the deposit when existing term deposits mature.
“The interest rates on savings products such as our plus saver and sumatin accounts will also reduce,” he said.
“BSP’s funding base like that of other banks in PNG is largely sourced from our retail and business customers and not from an institutional wholesale market as is the case in Australia and other countries which are directly influenced by cash rates.
“To enable our variable home loan customers to get immediate benefit from the lower interest rates, BSP will over the next few weeks align the repayments on those housing loans to the lower variable rate. Business customers who would like to have their repayment schedules revised based on the lower interest rate can contact their relationship manager.”