SIB tells lenders to ease loan terms on interest rate caps

Banks have to loosen their credit standards if they are to bridge the net interest income deficit arising from capped rates in the 2017 financial year, an investment bank says in a report.

In its latest banking sector update, analysts at Standard Investment Bank (SIB) say the loan caps alone are unlikely to lead to increased demand for credit, especially with the lower credit growth to the private sector in recent months, which was key in informing a 50 basis points Central Bank Rate cut last month.