Zambia - Standard Chartered Bank has said the B-plus rating which was awarded to Zambia by Fitch Rating agency last week, will force commercial banks to reduce interest rates as borrowers will now be able to borrow from the international capital markets. And the Standard Chartered Bank last year contributed K96.592 billion in taxes to the treasury. Standard Chartered Bank managing director Mizinga Melu said with the B-plus rating accord to Zambia firms would be able to tap international capital markets for financing thereby creating competition in the market.

Ms Melu said during a press briefing in Lusaka yesterday that it was encouraging that the Zambian Government plans to issue US$500 million in Euro bond to raise funds for infrastructure development.

Ms Melu said the rating serves as a commitment to Zambia's on-going reforms as the country had already established itself a reputation of fiscal conservation.

She said Standard Chartered Bank would continue reviewing its base rate in line with the macroeconomic indicators such as inflation.

Ms Melu said according to the 2010 account results, the bank posted a net profit of K133.152 billion representing a growth of 99 per cent.

"Our balance sheet has grown 53 per cent year on tear to K4, 558 billion and our deposits have also increased to 35 per cent year on year to K3, 164 billion," Ms Melu said.

She said the bank had continued to perform very strongly against increased competition from both international and local banks.

Ms Melu said on the international front, the ongoing conflicts in North Africa and the Middle East would impact on oil prices.

She said oil prices would have an impact on the strength of the Kwacha with an immediate reaction being in terms o f increased demand from the energy sector which may weaken the Kwacha to a certain extent.

"However, the Bank of Zambia (BOZ) has huge foreign exchange reserves of four months import cover to cushion any adverse effects," Ms Melu said.

She said the banks focus on the kwacha would in the first half range bound at K4, 750 and extend its gain further with pivotal support at K4, 650 levels in the second of the year.

The local currency would be supported by the buoyant copper prices on the London Metal Exchange (LME), trade surplus and favorable domestic economic environment which includes low inflation, interest rates and high foreign reserves.

Times of Zambia/10/03/2011