guru267 wrote:theman192000 wrote:Question to the experts.
How did EBL manage to reduce NPL from 4.5% in Mar '11 to 2.7% in Mar '12 considering an increase in interest rates during the same period?
Increasing lending rates does not necessarily mean increasing defaults especially if they are managed well through restricturing through longer repayment periods rather than increased payments..
The lower NPLs means lower default risk
To add more weight to this explanation especially regarding member. Member has 7.5Mn customers aka depositors (a stat shared in jest by Dr.Mwangi was every 7 of 10 new bank accounts are opened at Member) therefore this will continually grow. The decline in NPL is just the default risk has reduced as CB implemented KBA's recommendations and for member specifically, its customers have continually (religiously as put by Dr. Mwangi) been paying their loans taking into account 46% of Kenyans voted Member as the brand/institution that highly impacted their lives - thus some emotional attachment can be an unquantifiable element for the decrease in NPLs.
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