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Law Capping interest rates
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muandiwambeu
#1001 Posted : Sunday, September 11, 2016 10:27:41 AM
Rank: Veteran

Joined: 8/28/2015
Posts: 1,247
wukan wrote:
KulaRaha wrote:
obiero wrote:
KulaRaha wrote:
At 12.9% kcb and co are doomed.

What forms the basis of your judgement. Kenyan banks could lend at 5% and still make a profit.. It all depends on cost of funds.. Recalibration of the accounts that qualify for the minimum of 70% on CBR shall determine which bank thrives.. COOP via the SACCO movement remains the best bet to ride this wave


With a gross spread of 6% and npls higher, how will they earn a profit?


The aim is to maintain the market share so for a while the profit motive takes a chill. I would bet Equity would come at 12% and effectively wipe out the Sacco movement's value proposition. Why would anyone borrow their own money at 12% when you can get it from the bank? I would expect Sacco deposits will shrink so Coop would the worst bus

@wakun you have a point I had not seen coming. but it will take some time for the echo's to make rounds. though and simply stated banks are having a Molotov cocktail in their menu and am not ready to dine with them. imagine kbbr at 6.5% that would make it 10.5% for the banks. I would borrow for the first time in my life a secured loan to setup my fourth small production industry without looking over my shoulder's. let the whipping continue.
,Behold, a sower went forth to sow;....
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obiero
#1002 Posted : Sunday, September 11, 2016 1:22:21 PM
Rank: Elder

Joined: 6/23/2009
Posts: 14,320
Location: nairobi
muandiwambeu wrote:
wukan wrote:
KulaRaha wrote:
obiero wrote:
KulaRaha wrote:
At 12.9% kcb and co are doomed.

What forms the basis of your judgement. Kenyan banks could lend at 5% and still make a profit.. It all depends on cost of funds.. Recalibration of the accounts that qualify for the minimum of 70% on CBR shall determine which bank thrives.. COOP via the SACCO movement remains the best bet to ride this wave


With a gross spread of 6% and npls higher, how will they earn a profit?


The aim is to maintain the market share so for a while the profit motive takes a chill. I would bet Equity would come at 12% and effectively wipe out the Sacco movement's value proposition. Why would anyone borrow their own money at 12% when you can get it from the bank? I would expect Sacco deposits will shrink so Coop would the worst bus

@wakun you have a point I had not seen coming. but it will take some time for the echo's to make rounds. though and simply stated banks are having a Molotov cocktail in their menu and am not ready to dine with them. imagine kbbr at 6.5% that would make it 10.5% for the banks. I would borrow for the first time in my life a secured loan to setup my fourth small production industry without looking over my shoulder's. let the whipping continue.

Banks have a lot of say in the financial agenda for the country.. If the banks needed to move the rates up, they could do it.. Plus negotiation fee cannot be capped so the banks can raise appraisal fee to 5% per loan, chargeable annually..
COOP, IMH, KEGN, KQ, MTNU
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kaifastus
#1003 Posted : Sunday, September 11, 2016 2:27:25 PM
Rank: Member

Joined: 8/17/2011
Posts: 207
Location: humu humu
obiero wrote:
muandiwambeu wrote:
wukan wrote:
KulaRaha wrote:
obiero wrote:
KulaRaha wrote:
At 12.9% kcb and co are doomed.

What forms the basis of your judgement. Kenyan banks could lend at 5% and still make a profit.. It all depends on cost of funds.. Recalibration of the accounts that qualify for the minimum of 70% on CBR shall determine which bank thrives.. COOP via the SACCO movement remains the best bet to ride this wave


With a gross spread of 6% and npls higher, how will they earn a profit?


The aim is to maintain the market share so for a while the profit motive takes a chill. I would bet Equity would come at 12% and effectively wipe out the Sacco movement's value proposition. Why would anyone borrow their own money at 12% when you can get it from the bank? I would expect Sacco deposits will shrink so Coop would the worst bus

@wakun you have a point I had not seen coming. but it will take some time for the echo's to make rounds. though and simply stated banks are having a Molotov cocktail in their menu and am not ready to dine with them. imagine kbbr at 6.5% that would make it 10.5% for the banks. I would borrow for the first time in my life a secured loan to setup my fourth small production industry without looking over my shoulder's. let the whipping continue.

Banks have a lot of say in the financial agenda for the country.. If the banks needed to move the rates up, they could do it.. Plus negotiation fee cannot be capped so the banks can raise appraisal fee to 5% per loan, chargeable annually..


Any fee increment is being monitored by cbk. The cbk recently instructed banks to remove "nuisance" fees like bank closing charges. banks like coop were sending sms threatening to list customers in credit bureaus as defaulters coz of silly charges which arent loans! Again customers will vote with their feet/money and migrate to friendlier banks.
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Impunity
#1004 Posted : Sunday, September 11, 2016 2:32:16 PM
Rank: Elder

Joined: 3/2/2009
Posts: 26,331
Location: Masada
kaifastus wrote:
obiero wrote:
muandiwambeu wrote:
wukan wrote:
KulaRaha wrote:
obiero wrote:
KulaRaha wrote:
At 12.9% kcb and co are doomed.

What forms the basis of your judgement. Kenyan banks could lend at 5% and still make a profit.. It all depends on cost of funds.. Recalibration of the accounts that qualify for the minimum of 70% on CBR shall determine which bank thrives.. COOP via the SACCO movement remains the best bet to ride this wave


With a gross spread of 6% and npls higher, how will they earn a profit?


The aim is to maintain the market share so for a while the profit motive takes a chill. I would bet Equity would come at 12% and effectively wipe out the Sacco movement's value proposition. Why would anyone borrow their own money at 12% when you can get it from the bank? I would expect Sacco deposits will shrink so Coop would the worst bus

@wakun you have a point I had not seen coming. but it will take some time for the echo's to make rounds. though and simply stated banks are having a Molotov cocktail in their menu and am not ready to dine with them. imagine kbbr at 6.5% that would make it 10.5% for the banks. I would borrow for the first time in my life a secured loan to setup my fourth small production industry without looking over my shoulder's. let the whipping continue.

Banks have a lot of say in the financial agenda for the country.. If the banks needed to move the rates up, they could do it.. Plus negotiation fee cannot be capped so the banks can raise appraisal fee to 5% per loan, chargeable annually..


Any fee increment is being monitored by cbk. The cbk recently instructed banks to remove "nuisance" fees like bank closing charges. banks like coop were sending sms threatening to list customers in credit bureaus as defaulters coz of silly charges which arent loans! Again customers will vote with their feet/money and migrate to friendlier banks.


The law can be amended to also cap the fees...kwani iko nini?
Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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streetwise
#1005 Posted : Sunday, September 11, 2016 3:07:57 PM
Rank: Veteran

Joined: 6/23/2011
Posts: 1,740
Location: Nairobi
Is it true CBK has advised use of KBBR
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Impunity
#1006 Posted : Sunday, September 11, 2016 4:10:59 PM
Rank: Elder

Joined: 3/2/2009
Posts: 26,331
Location: Masada
streetwise wrote:
Is it true CBK has advised use of KBBR


I have not heard...nothing on their twirra handle too.
Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Ericsson
#1007 Posted : Sunday, September 11, 2016 8:45:59 PM
Rank: Elder

Joined: 12/4/2009
Posts: 10,820
Location: NAIROBI
http://www.businessdaily...377426-fos5lr/index.html
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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tom_boy
#1008 Posted : Monday, September 12, 2016 7:29:08 AM
Rank: Member

Joined: 2/20/2007
Posts: 767
tom_boy wrote:
obiero wrote:
maka wrote:
obiero wrote:
Pesa Nane wrote:
obiero wrote:
[quote=maka]Look at this;

This month the Central Bank of Kenya offered a 10 year Treasury Bond for a total amount of up to Kshs 25 Billion. The total number of bids received was 795 amounting to Kshs 26.31 Billion. The Weighted average rate for successful bids was 15.039%

Coupon 15.039% crazy...even after WHT its good cash

I spoke to the president and his take was that the government shall pull down borrowing rates for itself, which is a good thing.. Expect government to obtain cheap credit. Watch the tbill rate slide down in coming months. We live in good times

Congrats for speaking with @citizen001 but you should have asked him how the "government shall pull down borrowing rates for itself" when in fact we know the rates are market driven (through auctions)

Beg to differ. The auctions are driven mainly by banks.. Now that banks are pushed to the wall on consumer lending, expect government to show a stiff hand


Rates at the auction won't come down anytime soon....that 10 year was just a start.

91, 182, 364 day bills all down.. Expect the shorter tenor to hit 6.5% by December.. As per Graham's law, the bulls at the NSE must show up shortly.. http://www.businessdaily...4800-b0eb44z/index.html[/quote]

As per my predictions, the dance between banks and Government in pricing billsand bonds has begun. Banks cannot afford to flood CBK with offers! They will have to worksmart.


50% haircut on banks profits coming soon. Coop, KCB, Equity will be hardest hit. They can no longer fleece wanjiku, T bill rates coming down and cost of deposits has gone up. Sub 20sh is on the way for Equity and KCB, and you can take that to the bank. smile
They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
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streetwise
#1009 Posted : Monday, September 12, 2016 8:20:19 AM
Rank: Veteran

Joined: 6/23/2011
Posts: 1,740
Location: Nairobi
I think this thing as as bout Gova getting cheaper money.
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tom_boy
#1010 Posted : Monday, September 12, 2016 8:26:51 AM
Rank: Member

Joined: 2/20/2007
Posts: 767
streetwise wrote:
I think this thing as as bout Gova getting cheaper money.


The government is you and I ....... or so I was taught in primary school.smile
They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
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