FUNKY wrote:http://www.theeastafrican.co.ke/business/Equity+looks+to+corporates++SMEs+for+growth/-/2560/1210782/-/iu1nr0z/-/index.html
I dont think the analogy below is correct.
Quote:However, Equity has seen a significant in on the interest it pays for customer deposits and other deposits. Interest expense — the charges Equity has to incur on customer deposits — went up by 46 per cent between the first quarter and the second quarter of the year.
In the three months to March 2011, Equity’s interest expense stood at $4.7 million. But between April to June the interest expense stood at $6.6 million.
Many analysts say that this is because a rising interest rate regime has forced the bank to pay more for its deposits as clients weigh the option of investing in government securities at better rates as opposed to deposit rates offered by banks —though, this might not be the case because Equity’s deposits come from individuals and clients current and savings accounts.
Why would a writer quote analysts and then say this might no be the case.
I think the reason Equity is paying more in interest expenses is because of the subsidized loans it receives from development banks and the Govt to lend to SMEs.For instance, youthfund and women fund loans which I think Equity is supposed to pay btwn 7 & 10% interest on the money,Now if few women/youth groups qualify for the loans equity is forced to pay interest on money that has not been lent hence the high interest expense.
'......to the acknowledgment of the mystery of God, and of the Father, and of Christ; 3 In whom are hid all the treasures of wisdom and knowledge.' Colossians 2:2-3