Fluctuations in interest rates affect all of us. From a business perspective, movements in interest rates can have a significant impact on company performance. This is true whether the business is cash rich (i.e. a depositer) or relies on bank funding (i.e. a borrower). In both situations, finance managers can manage the interest rate risk to safeguard the company from an adverse move in rates.
How the Fixed Rate Loan works:
- An interest rate is agreed today for a loan that will be repaid over a fixed period of time.
- Periods typically range from one week to twenty five years.
- Most widely used hedging instrument by N.I. business.
First Trust Bank clients can discuss a fixed rate loan with their Branch. Non First Trust Bank clients should contact their closest Branch. Fixed rate loans can be booked for borrowings of £50,000.00 upwards.
For Borrowers, management of an interest rate risk can:
- Create certainty of debt repayments.
- Ensure accurate forecasting and budgeting.
- Safeguard profitability (or competitiveness).
- Eliminate uncertainty from long term projects.
- Protect against rising interest rates.
Local businesses should consider formulating a strategy to manage interest rate risks. At First Trust Bank we offer a comprehensive suite of interest rate risk services and professional guidance that help companies improve their own risk management practices.
For further information on Interest Rate products for borrowers and depositers please refer to the Related Information section.
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