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Wai!! it is a blood bath, kcb, coop, equity down 9%
Rank: Member Joined: 9/11/2015 Posts: 245 Location: Thika
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Any smart investor will avoid banking stocks until he/she can roughly assess the impact of the new law on the EPS of banks. That may take one year or so. Therefore, for the next one year, banking stocks will take one for the team Since men have learned to shoot without missing, I have learned to fly without perching
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Rank: Member Joined: 1/31/2007 Posts: 304
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VituVingiSana wrote:moneydust wrote:wukan wrote:Uhuru and his economic advisers grossly underestimated portfolio forex inflows. Waiting for the carnage to extend to the forex markets Clearly he chose populism instead of sense.By rolling the countrys' tradition of free market policies he has ignited a carnage that will be felt far and wide in the countrys' economy.He will now know what it means to be in a global market. Cant wait for the fire to filter to the currency market,shillingi yetu RIP  The solution(s) is for GoK to: 1) Stop borrowing at high rates for projects. Rationalize the projects being funded using taxpayer funds eg NYS. 2) Stop borrowing to fund the recurrent expenditure eg commissions, cars, etc. 3) Rationalize the court system to defaulters are brought to book sooner. 4) Improve the collateralization system e.g. fake/duplicate Title Deeds, etc which makes it harder for GENUINE borrowers. 5) GoK should get out of the business of Business eg KQ, Uchumi, etc. All the other stuff is irrelevant as long as GoK spends money like it can be printed. Which it can. With inflationary results. Easier said than done..this is Kenya we love shortcuts for everything.
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Rank: Chief Joined: 1/3/2007 Posts: 18,349 Location: Nairobi
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Jon Jones wrote:Banking stocks will slide until end of the year when investors can roughly investigate the impact of the law on their profitability. Until then, expect massive exits and rock bottom prices. Banks have a smaller margin for error now. Only the best candidates will get loans. You can now know that you can now qualify for maybe half what you would have qualified for before the law. This is help banks curb the growing NPLs. The marginal borrowers [potential defaulters] will be locked out. Plus as you say those who will be lent funds will be charged less BUT expected to put more collateral up thus reducing the risk of default. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 9/11/2015 Posts: 245 Location: Thika
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VituVingiSana wrote:Jon Jones wrote:Banking stocks will slide until end of the year when investors can roughly investigate the impact of the law on their profitability. Until then, expect massive exits and rock bottom prices. Banks have a smaller margin for error now. Only the best candidates will get loans. You can now know that you can now qualify for maybe half what you would have qualified for before the law. This is help banks curb the growing NPLs. The marginal borrowers [potential defaulters] will be locked out. Plus as you say those who will be lent funds will be charged less BUT expected to put more collateral up thus reducing the risk of default. In my opinion, this law will force banks to work for their money. They will have to lend prudently by examining how the funds will be used in certain projects. This is a good thing for Wanjiku because they will be getting free financial advise in the process...basically, if the banker refuses to give you a loan, your idea probably sucks. Previously, they could afford to finance two bad projects for every five because the spreads were large enough. Since men have learned to shoot without missing, I have learned to fly without perching
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Rank: New-farer Joined: 10/3/2014 Posts: 20
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Whatever is happening at the NSE is simply a correction. Banks have been making obscene profits through their predatory behavior hence overpriced shares. This will continue until middle ground is reached meanwhile Wanjiku is the winner. Those that are expecting wanjiku to be neglected by the Banks you are in a dreamland; Barclays Bank attempted this long before the interest rates caps until Equity happened. Clearly, it is Wanjiku that has made Equity a success story. Wanjiku didn't collapse Dubai Bank, Imperial or Chase, Never! If present banks behave like former Barclays Bank, in a today's globalized economy where crowd funding, peer2peer lending, online channels exist then am sorry for them, it shall be an obituary epitome.
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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Creativity starts now. Credit cards will now be one of the holy grails for the banks. Expect a call on soon from your 'friendly bank'.
BBI will solve it :)
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Rank: Chief Joined: 1/3/2007 Posts: 18,349 Location: Nairobi
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Jon Jones wrote:VituVingiSana wrote:Jon Jones wrote:Banking stocks will slide until end of the year when investors can roughly investigate the impact of the law on their profitability. Until then, expect massive exits and rock bottom prices. Banks have a smaller margin for error now. Only the best candidates will get loans. You can now know that you can now qualify for maybe half what you would have qualified for before the law. This is help banks curb the growing NPLs. The marginal borrowers [potential defaulters] will be locked out. Plus as you say those who will be lent funds will be charged less BUT expected to put more collateral up thus reducing the risk of default. In my opinion, this law will force banks to work for their money. They will have to lend prudently by examining how the funds will be used in certain projects. This is a good thing for Wanjiku because they will be getting free financial advise in the process...basically, if the banker refuses to give you a loan, your idea probably sucks. Previously, they could afford to finance two bad projects for every five because the spreads were large enough. I expect the number of Real Estate projects coming up to take a hit as financing dries up for poorly thought out projects. Based on @JonJones views, this might be positive for the KE economy to cool off a bit. And a reduction in (24%) consumer loans will help both banks & borrowers take a breather. I believe the Real Estate market needs a cooling off period and focus should shift to "low-income" housing vs the middle-class & high-income housing. My take is most banks [especially those that did not lend at to consumers at high rates] will be fine. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 1/31/2007 Posts: 304
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tafutabiz wrote:Whatever is happening at the NSE is simply a correction. Banks have been making obscene profits through their predatory behavior hence overpriced shares. This will continue until middle ground is reached meanwhile Wanjiku is the winner. Those that are expecting wanjiku to be neglected by the Banks you are in a dreamland; Barclays Bank attempted this long before the interest rates caps until Equity happened. Clearly, it is Wanjiku that has made Equity a success story. Wanjiku didn't collapse Dubai Bank, Imperial or Chase, Never! If present banks behave like former Barclays Bank, in a today's globalized economy where crowd funding, peer2peer lending, online channels exist then am sorry for them, it shall be an obituary epitome. Obscene..that is one of those myths.. as a percentage of their total assets the banks are making less than 5% in profit.Compare that to the return in other investments ie real estate,wholesale and retail etc you will find that the banks are not really doing that well. Don't be wowed by the absolute figure.
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Rank: Member Joined: 9/11/2015 Posts: 245 Location: Thika
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JM has lost a cool BIRRION today. Tomorrow is another day he will take one for the team. His entire networth might be cut by half or worse by the time dust settles with this law. This is the flip side of the stock market. One day a politician can decide to cut your networth. Since men have learned to shoot without missing, I have learned to fly without perching
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Rank: Veteran Joined: 7/3/2007 Posts: 1,635
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moneydust wrote:tafutabiz wrote:Whatever is happening at the NSE is simply a correction. Banks have been making obscene profits through their predatory behavior hence overpriced shares. This will continue until middle ground is reached meanwhile Wanjiku is the winner. Those that are expecting wanjiku to be neglected by the Banks you are in a dreamland; Barclays Bank attempted this long before the interest rates caps until Equity happened. Clearly, it is Wanjiku that has made Equity a success story. Wanjiku didn't collapse Dubai Bank, Imperial or Chase, Never! If present banks behave like former Barclays Bank, in a today's globalized economy where crowd funding, peer2peer lending, online channels exist then am sorry for them, it shall be an obituary epitome. Obscene..that is one of those myths.. as a percentage of their total assets the banks are making less than 5% in profit.Compare that to the return in other investments ie real estate,wholesale and retail etc you will find that the banks are not really doing that well. Don't be wowed by the absolute figure. The problem is not the return that Banks make, but how they do it. In fact I would not mind if they made 10-20% - but they have become the worst brokers you can think of. They take Wanjiku's money, pay her a pittance and then sell it back to her at an exorbitant cost. In more developed economies Banks make most of their money from investment financing, IPO, M&A, risk mitigation, conveyancing services etc. In Kenya they have become lazy and rely on interest charges and government paper. This has to stop. "The opposite of a correct statement is a false statement. But the opposite of a profound truth may well be another profound truth." (Niels Bohr)
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Wai!! it is a blood bath, kcb, coop, equity down 9%
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