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Equity lending rate 25%
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GGK
#51 Posted : Saturday, November 12, 2011 5:07:17 PM
Rank: Member

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
Rank: Member

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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  | | Edit by user: Sunday, November 13, 2011 5:40 PM | Reason: Not specified
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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  | | Edit by user: Sunday, November 13, 2011 9:55 PM | Reason: Not specified
erifloss
#58 Posted : Monday, November 14, 2011 8:18:18 AM
Rank: Member

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
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
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aces
#60 Posted : Tuesday, November 15, 2011 8:52:06 AM
Rank: Member

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%!

"

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