Wegagen Joins Bandwagon on Interest Rate Cuts, Despite Central Bank Inaction

Wegagen Bank has followed its peers in cutting interest rates on commercial loans for borrowers in the hotel and tourism; tour and travel; and horticulture industries. These are industries the administration has identified are in dire conditions due to the Novel Coronavirus (COVID-19) pandemic.

Wegagen is the latest in the growing list of commercial banks responding to the plight of their burrowers slashing interest rates, following the footsteps of Awash, United and Zemen banks. These moves are taken by the banks while the central bank remains adamant not to cut interest rate on deposit at seven percent.

Wegagen Bank cut interest rates for borrowers from the hotel and tourism businesses by 53pc, while its clients in the horticulture industry got a 39pc reduction. The revised interest rates that is set to become effective as of June 1 will remain active for three months. Wegagen has been charging between 15.3pc to 16.85pc interest for borrowers from the hotel and tourism sector and 13pc for borrowers from the floriculture sector.

The Bank also slashed interest rates for borrowers from other industries by three percentage points in January, according to Abay Mehari, president. In business for 23 years, Wegagen netted 625.7 million Br in profit during the last fiscal year.

The businesses that received the interest rate cut cover 58pc of the total loan portfolio of the Bank that has 23.6 billion Br in outstanding loans as of April 30, 2020.