FNB urges consumers to repay debt amid rate relief | Fin24
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FNB urges consumers to repay debt amid rate relief

Sep 22 2016 18:26

Cape Town - First National Bank (FNB) will maintain its prime lending rate at 10.5%, the bank said in a statement.

This follows a decision taken earlier on Thursday by the South African Reserve Bank (Sarb) Monetary Policy Committee to leave interest rates unchanged until the final MPC meeting for 2016 on 24 November.  

This decision applies to all prime-linked accounts.

“We are seeing a gradual recovery in business activity from a sharp contraction earlier in the year,” said FNB CEO Jacques Celliers in reaction to the rate decision. “Consumers, however, remain extremely cautious and low levels of confidence are restraining growth.” 

Celliers said the period of stable interest rates offers indebted consumers an ideal opportunity to reduce their lending and create greater personal financial stability.

“We continue to see stable credit health across our consumer and business sectors; indicating that the majority of customers are weathering current tough conditions.”

At Thursday’s interest rate announcement, Reserve Bank governor Lesetja Kganyago said consumption expenditure by households remains weak despite a return to positive GDP growth in the second quarter of this year.

In July, retail trade sales declined further in contrast to positive wholesale trade sales, while new vehicle sales continued their negative trend in July and August.

"The outlook for consumption expenditure growth is expected to remain constrained, given the unfavourable employment outlook, the absence of significant positive wealth effects, and the slow pace of growth of real disposable income of households,” he added.

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