@sparky. There's a huge interest rate risk that this could all blow up for stan chart, even Barclays when interest rates reverse, like in 2004 so you've gotta point...but SCBK income stream now is less dependent on govt bonds (ratio is 32/60 govt bonds income/normal loans income vs 47/36 in 2003) and CBK policy is easier to predict (low interest rate regime).
They can keep their cost base low with this strategy...if you have only 35 branches (opening 1 branch per year) you pretty much don't care about ordinary consumers. They are more than capable of lending to both govt and ordinary customers as long as they have support from mother SCBK Holdings (which they have)...they also have a niche clientele (KEnGen/KPLc,etc), so who are they disappointing?
SCBK have the best treasury (bond) dep in Kenya...what's interesting is the new licenses being issued that will enable banks to trade bonds on the secondary market directly...SCBK will benefit greatly from that. @chali...banks do not lend depositors money...they create deposits when they make loans.
“We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden