FirstCaribbean International Bank Jamaica will cut its prime lending rate by two percentage points effective July 1, lowering it to 18.25 per cent in a move the bank is attributing to the success of the debt swap in February and the performance of interest rates.
"FirstCaribbean is committed to providing access to affordable lending to all sectors of the economy," said managing director of FirstCaribbean Jamaica, Clovis Metcalfe, in a short statement, announcing the adjustment.
"This two-point reduction in our prime base rate comes within the context of the success of the Jamaica Debt Exchange (JDX) and the correlated stability in interest rates over the past few months."
Under the JDX programme, FCIBJ exchanged approximately $2.3 billion of its domestic bond for lower-yielding securities, and while interest income earned from those securities were expected to be affected negatively, FCIBJ had noted that management was actively pursing income diversification as part of its strategic objectives to offset the reduction.
The bank's decision follows the June 17 adjustment of its policy rate to 9.0 per cent by the Bank of Jamaica. A day before, the benchmark Treasury bill also trimmed 65 basis points to yield 9.26 per cent in the BOJ-managed monthly auction.
Since the JDX, whose bonds are priced at an average 12 per cent, interest rates have been trending downward.
The FirstCaribbean Jamaica, the No 4 bank, rates will move two points down from 20.25 per cent. Scotiabank Jamaica, the No 1 bank by deposits and loans, but No 2 by total assets, has led in this regard with its last two-point reduction in mid-May planting its rates at an industry low of 17.75 per cent.
FCIBJ last cut in rates was October 2009, when it shaved 150 basis points from its base rate, following signals of a downward movement in rates by the central bank.