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Equity lending rate 25%
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guru267
#41 Posted : Friday, November 11, 2011 6:45:39 PM
Rank: Elder


Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
astute wrote:
Lets wait and see, Kenyans are aware: They are officially the most expensive lenders!! The loan book growth days are numbered.


The only new thing equity has done is raise rates to 25%..

They have always charged interest based on principal instead of reducing balance and kenyans have known this the whole time..

But yet they still chose and are still choosing equity bank limited as their preferred lender of choice..
Mark 12:29
Deuteronomy 4:16
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mwekez@ji
#42 Posted : Friday, November 11, 2011 6:57:57 PM
Rank: Chief


Joined: 5/31/2011
Posts: 5,121
guru267 wrote:
astute wrote:
Lets wait and see, Kenyans are aware: They are officially the most expensive lenders!! The loan book growth days are numbered.


The only new thing equity has done is raise rates to 25%..

They have always charged interest based on principal instead of reducing balance and kenyans have known this the whole time..

But yet they still chose and are still choosing equity bank limited as their preferred lender of choice..


I doubt whether wanjiku (who are the majority of EB clients) know the difference between flat rate and reducing balancing rate. When she gets to know, she will run from this so called wanjiku's bank

... and no wonder EB is unable to grow its corporate business
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guru267
#43 Posted : Friday, November 11, 2011 7:20:58 PM
Rank: Elder


Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
mwezek@ji wrote:


... and no wonder EB is unable to grow its corporate business


Who needs corporates??

Numbers dont lie..
retail business is proving more profitable than corporate business..

There is not a bank in kenya that doesnt envy equity bank limited..
Mark 12:29
Deuteronomy 4:16
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mwekez@ji
#44 Posted : Saturday, November 12, 2011 10:01:23 AM
Rank: Chief


Joined: 5/31/2011
Posts: 5,121
guru267 wrote:
mwezek@ji wrote:


... and no wonder EB is unable to grow its corporate business


Who needs corporates??

Numbers dont lie..
retail business is proving more profitable than corporate business..

There is not a bank in kenya that doesnt envy equity bank limited..


EVERY BANK NEEDS CORPORATES ...

Even Equity Bank recently hired expensive foreigners to its corporate banking as it seeks new ideas to gain a larger foothold in the lucrative corporate lending.

http://allafrica.com/stories/201110310955.html

FYI, the day wanjiku will wake up, Equity Bank itajiju
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Sober
#45 Posted : Saturday, November 12, 2011 10:09:13 AM
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Joined: 11/27/2007
Posts: 3,604
and the other banks follow suit:
New lending rates
FamilyBankKenya 24.5%
BarclaysKenya 22.5%
African parents don't know how to say sorry.. the closest you will get to a sorry is a 'have you eaten'
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Sober
#46 Posted : Saturday, November 12, 2011 10:16:03 AM
Rank: Elder


Joined: 11/27/2007
Posts: 3,604
Standard Chartered Bank raises its Base Lending Rate to a massive 23 per cent with effect from 15th Nov 2011
African parents don't know how to say sorry.. the closest you will get to a sorry is a 'have you eaten'
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Mpenzi
#47 Posted : Saturday, November 12, 2011 12:42:21 PM
Rank: Veteran


Joined: 10/17/2008
Posts: 1,234
Sober wrote:
Standard Chartered Bank raises its Base Lending Rate to a massive 23 per cent with effect from 15th Nov 2011

But what is the effective rates being charged by these? They could be much higher than EB's 25%.
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Stealth
#48 Posted : Saturday, November 12, 2011 1:06:56 PM
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Joined: 5/3/2010
Posts: 145
Location: East Africa
Already seeing the USD going down. Hope it goes down down down doooooooown further.

The rate increase is for new and existing facilities.
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GGK
#49 Posted : Saturday, November 12, 2011 3:48:14 PM
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Joined: 11/21/2006
Posts: 608
Location: Ruiru
Sober wrote:
and the other banks follow suit:
New lending rates
FamilyBankKenya 24.5%
BarclaysKenya 22.5%



It would be difficult to expect a bank to lend at a rate lower than inflation. EB does it this way because of simplicity.

How do you expect Wanjiku to understand the reducing balance model?
"..I am because we are. "― Ubuntu, Umtu,
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QW25081985
#50 Posted : Saturday, November 12, 2011 4:32:03 PM
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Joined: 8/29/2011
Posts: 1,045
Location: Mtaani
i think this was a case of who'll be first to throw int he towel on cheap rates ..lol
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GGK
#51 Posted : Saturday, November 12, 2011 5:07:17 PM
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Joined: 11/21/2006
Posts: 608
Location: Ruiru
The rates will go down after the forex madness and inflation subsides. However little of cheap credit seems to be going to fuel growth with most going for consumption or personal empowerment
"..I am because we are. "― Ubuntu, Umtu,
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astute
#52 Posted : Sunday, November 13, 2011 4:47:03 PM
Rank: Member


Joined: 3/24/2010
Posts: 101
Location: Nairobi
mwekez@ji wrote:
guru267 wrote:
astute wrote:
Lets wait and see, Kenyans are aware: They are officially the most expensive lenders!! The loan book growth days are numbered.


The only new thing equity has done is raise rates to 25%..

They have always charged interest based on principal instead of reducing balance and kenyans have known this the whole time..

But yet they still chose and are still choosing equity bank limited as their preferred lender of choice..


I doubt whether wanjiku (who are the majority of EB clients) know the difference between flat rate and reducing balancing rate. When she gets to know, she will run from this so called wanjiku's bank

... and no wonder EB is unable to grow its corporate business


The Wanjikus aren't aware of this. I happen to be a treasurer of a Sacco, and when the interest policy changed from flat rate interest to reducing balance, it took a thorough education program to educate the members. Members were rejecting the reducing balance but now the understand and are happy....Equity has been thriving on providing EASY loans and not CHEAP loans. The 25% rate will just make serious borrowers; who consider the return on the borrowed money- to evaluate their position. For those who are ignorant, they will be awakened when they become unable to pay the loan, followed by default and auctioneers roving around...WATCH OUT
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guru267
#53 Posted : Sunday, November 13, 2011 5:19:23 PM
Rank: Elder


Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
astute wrote:

Equity has been thriving on providing EASY loans and not CHEAP loans. The 25% rate will just make serious borrowers; who consider the return on the borrowed money- to evaluate their position. For those who are ignorant, they will be awakened when they become unable to pay the loan, followed by default and auctioneers roving around...WATCH OUT


Inorder to maintain margins all Kenyan banks will raise rates to between 23-25% so very soon you may have little to argue about..

When CBK rate was 6% lending interest rates were 14% (8% spread)
When CBK rate was 11% lending interest rates were 19% (8% spread)
When the CBK rate is 16.5% what does the lending rate have to be to maintain an 8% spread????
ANSWER= 24.5%

I dont know why kenyans are so surprised by equity's move since other banks will definitely follow suit..
Shareholders before customers always!!
Mark 12:29
Deuteronomy 4:16
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astute
#54 Posted : Sunday, November 13, 2011 5:39:03 PM
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Joined: 3/24/2010
Posts: 101
Location: Nairobi
guru267 wrote:
astute wrote:

Equity has been thriving on providing EASY loans and not CHEAP loans. The 25% rate will just make serious borrowers; who consider the return on the borrowed money- to evaluate their position. For those who are ignorant, they will be awakened when they become unable to pay the loan, followed by default and auctioneers roving around...WATCH OUT


Inorder to maintain margins all Kenyan banks will raise rates to between 23-25% so very soon you may have little to argue about..

When CBK rate was 6% lending interest rates were 14% (8% spread)
When CBK rate was 11% lending interest rates were 19% (8% spread)
When the CBK rate is 16.5% what does the lending rate have to be to maintain an 8% spread????
ANSWER= 24.5%


I dont know why kenyans are so surprised by equity's move since other banks will definitely follow suit..
Shareholders before customers always!!



You are 100% correct. The difference has been that the other banks interest is on reducing balance, Equity has been flat/fixed. This makes their loans more expensive
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guru267
#55 Posted : Sunday, November 13, 2011 6:37:17 PM
Rank: Elder


Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
astute wrote:
You are 100% correct. The difference has been that the other banks interest is on reducing balance, Equity has been flat/fixed. This makes their loans more expensive


My question is.. Dont equity customers know their loan repayment schedules?? Havent they been aware that all this time they have been paying interest on principal rather than reducing balance??

But yet they flock to equity because of easy access to loans.. How will this change if it is already a known factor??

IMHO with the level of risk Equity bank takes on its loan book and its easy access loans it deserves very much to be the most expensive lender.. Dont you think??
Mark 12:29
Deuteronomy 4:16
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astute
#56 Posted : Sunday, November 13, 2011 7:22:35 PM
Rank: Member


Joined: 3/24/2010
Posts: 101
Location: Nairobi
guru267 wrote:
astute wrote:
You are 100% correct. The difference has been that the other banks interest is on reducing balance, Equity has been flat/fixed. This makes their loans more expensive


My question is.. Dont equity customers know their loan repayment schedules?? Havent they been aware that all this time they have been paying interest on principal rather than reducing balance??

But yet they flock to equity because of easy access to loans.. How will this change if it is already a known factor??

IMHO with the level of risk Equity bank takes on its loan book and its easy access loans it deserves very much to be the most expensive lender.. Dont you think??


Very right, EB takes high risks, it has to get high returns..
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youcan'tstopusnow
#57 Posted : Sunday, November 13, 2011 9:51:09 PM
Rank: Chief


Joined: 3/24/2010
Posts: 6,779
Location: Black Africa
CBA raises interest on savings to 10 per cent

"In the latest review Middle East Bank has quoted the highest base rate at 25 per cent while Equity Bank announced that it would charge 25 per cent as the applicable rate on its loans."

http://www.businessdaily...2/-/39nh7h/-/index.html

GOD BLESS YOUR LIFE
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erifloss
#58 Posted : Monday, November 14, 2011 8:18:18 AM
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Joined: 6/21/2010
Posts: 514
Location: Nairobi
With EB, i think they charge int with regards to the amount of loan taken. Once took a substantial amount which was charged on reducing balance.
'They say money cannot buy me happiness but when i compare when i had none and now, i'm happier' Kevin O'leary
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guru267
#59 Posted : Monday, November 14, 2011 11:21:47 PM
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aces
#60 Posted : Tuesday, November 15, 2011 8:52:06 AM
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Joined: 9/6/2009
Posts: 92


If u come to think of it, guys ur misinformed when u say equity is expensive. The 25% is the effective interest rate, not the base rate. And, loans advanced to clients, depending on the product type, can either be flat rate or reducing balance. This applies to the other banks as well. Not all loans are flat rate.ie interest charged on principal...the other banks have increased the base lending rate to 23%, a good no to 24%. If you add the risk factor to 24%, then their effective interest rate should be btn 27% and 30%!

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Life's a wheel of fortune and its my chance to spin it"
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