Banks raise interest rates to satisfy shareholders – Business Week Editor

The Editor-in-Chief of Business Week, Toma Imre has alleged that most banks raise interest rates because they use the revenue as profits in order to satisfy shareholder confidence.

Speaking on Joy Business Trends, he said the banks channel other sources of revenue into other ventures such as establishing more branches and technological platforms which according to him, do not rope in immediate benefits.

He said it is for this reason that they increase interest rates in order to satisfy their shareholders in the short term while the other sources of revenue are used in building capacity to build profit over the long term.

“To keep the shareholders happy in the short term, what they do is just increase the interest [rate] margins…while their money is being used to increase the capacity to earn profit over the longer term,” he said.

Business analyst, Sydney Casely-Hayford, who was also part of the discussion accused banks in the country of only focusing on making more profits to the neglect of improved services.

He said the introduction of Automated Teller Machines (ATMs) alone in the country should have reduced business costs of these banks but unfortunately, they seem to be more concerned with profit making.

He added that Ghana was yet to benefit from the fruits of technology in the sector, even though according to him, “it is the most technologically advanced sector” in the Ghanaian economy.

“With all the new ATMs that have come in place, and most of the banks increasing their ATM outlets, there should therefore have been some significant drop in the transaction media as we go forward, [but]this hasn’t reflected,” he said.

“I think we are not seeing the benefits of technology in this sector [despite the fact that] it is the most technologically advanced sector in our economy.”

Mr Casely-Hayford was also pessimistic about the impacts of the low inflation on the economy.

According to him, the inflation figure was not a real picture of the economic situation, adding that Ghana imports over 80% of goods into the country, thus, the country “is importing other people’s inflation.”

“Irrespective of whether people have seen a stronger cedi currency, which they use on the back to import, they still come in and price to market,” he said.

“So you are not going to feel much impact until real prices start dropping down and that will come when consumers actually ‘rebel’ and stop buying products at the levels that are being touted,” he asserted.

Story by Fidel Amoah/Myjoyonline.com/Ghana