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Law Capping interest rates
Rank: User Joined: 8/15/2013 Posts: 13,237 Location: Vacuum
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obiero wrote:Plimsoul wrote:Irony of using KBRR is that because it's lower, banks move to lending to govt. So tbills drop, and because tbills make up KBRR, KBRR drops further. CBK wont even have to change CBR.
Interesting times ahead.
But KBRR is extra low considering free deposits from majority of the transactional accounts.. CBA did no one a favor, including themselves.. But their source of funds may be illegit so we understand What do you mean their source of funds maybe illegit? If Obiero did it, Who Am I?
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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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CBA has to support the hand that feeds them/its owner Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 6/23/2009 Posts: 13,503 Location: nairobi
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maka wrote:obiero wrote:Pesa Nane wrote:obiero wrote:maka wrote: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...74800-b0eb44z/index.html
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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At 12.9% kcb and co are doomed. Business opportunities are like buses,there's always another one coming
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Rank: Elder Joined: 6/23/2009 Posts: 13,503 Location: nairobi
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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
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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Kenyan currency will be under pressure from the majors. CBK will raise interest rates to try cushion it and we'll be back to square one. This is an election gimmick and not a true economic policy. The incumbent is trying to use all means to secure second term Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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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? Business opportunities are like buses,there's always another one coming
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Rank: Member Joined: 2/20/2007 Posts: 767
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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. 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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Rank: Elder Joined: 11/5/2010 Posts: 2,459
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Ericsson wrote:CBA has to support the hand that feeds them/its owner CBA is going for the kill. They have realised equity and co. are stranded and can't make a move. Two things about CBA. 1. They bank for safcom who are struggling with a problem akin to Apple. Too much cash. 2. You know that balance in your mpesa account. It's electronic value and someone needs to hold the hard cash equivalent. CBA is that guy. They are the settlement bank for mpesa. And Kenyans move 200bn a month.
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Rank: Elder Joined: 10/1/2009 Posts: 2,436
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Ericsson wrote:CBA has to support the hand that feeds them/its owner No methinks the issue of ownership doesnt comes in here for reckoning at all. Most likley aligning themselves to the possibility of Omtata's suit going thru in which case they will be already compliant. CBA should be having better margins by virtue of low cost of funds my 2 cents.
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Rank: Elder Joined: 10/1/2009 Posts: 2,436
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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? Hapo sasa. Declining yields (from both gilts and lending) and rising cost of funds major challenge for banks. Banks must boost non-interest income and increase lending volumes to make up for the profit shrinkage. The lower their tier the more they have to work harder.
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Rank: Elder Joined: 10/1/2009 Posts: 2,436
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Plimsoul wrote:Irony of using KBRR is that because it's lower, banks move to lending to govt. So tbills drop, and because tbills make up KBRR, KBRR drops further. CBK wont even have to change CBR.
Interesting times ahead.
Interesting, hadnt looked at it this way. Reminds me of a circular reference, with cause leading to effect & effect leading to cause. So its obvious our rates will depend mostly on domestic gava spending by jubiree/ exchange rate stability...
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Rank: Member Joined: 8/17/2007 Posts: 294
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Intelligentsia wrote:Plimsoul wrote:Irony of using KBRR is that because it's lower, banks move to lending to govt. So tbills drop, and because tbills make up KBRR, KBRR drops further. CBK wont even have to change CBR.
Interesting times ahead.
Interesting, hadnt looked at it this way. Reminds me of a circular reference, with cause leading to effect & effect leading to cause. So its obvious our rates will depend mostly on domestic gava spending by jubiree/ exchange rate stability... what banks are more scared about is having to pay 7% interest on deposits they get for free currently
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Rank: Veteran Joined: 6/23/2011 Posts: 1,740 Location: Nairobi
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Let's as agree keeping your money at the bank is not creating any value and the banks loans need to be cheap for those who create value e.g. manufacturing,real estate to prosper.
For this to happen we must all sacrifice.
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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Have CBA revised interest on MSHWARI? What about interest on KCB-MPESA loans? The opposite of courage is not cowardice, it's conformity.
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Rank: Veteran Joined: 11/13/2015 Posts: 1,590
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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
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Rank: User Joined: 8/15/2013 Posts: 13,237 Location: Vacuum
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Plimsoul wrote:Irony of using KBRR is that because it's lower, banks move to lending to govt. So tbills drop, and because tbills make up KBRR, KBRR drops further. CBK wont even have to change CBR.
Interesting times ahead.
I do no think so, govt domestic borrowing currently stands less than 450B per year as compared to bank totla loan book of 1.2 Trillion and assets of 2.4 Trillion. Hence govt borrowing makes up a small percentage of the banks loan book, if the returns on T Bills are negligible, banks will simply stop buying them. If Obiero did it, Who Am I?
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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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 So it means SACCOs are likely to become irrelevant if banks can lend Wanjiku without security at these low interest rates?? The opposite of courage is not cowardice, it's conformity.
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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jerry 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 So it means SACCOs are likely to become irrelevant if banks can lend Wanjiku without security at these low interest rates?? Yes. But if both Banks and Saccos were to levy at 12%, the Saccos will still have an edge due to the ease of getting the loan from Saccos since no collateral is required, just a trust from guaranters! Banks has to go lower, perhaps to 9% in order to edge out Saccos! Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Member Joined: 3/3/2016 Posts: 132
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Swenani wrote:Plimsoul wrote:Irony of using KBRR is that because it's lower, banks move to lending to govt. So tbills drop, and because tbills make up KBRR, KBRR drops further. CBK wont even have to change CBR.
Interesting times ahead.
I do no think so, govt domestic borrowing currently stands less than 450B per year as compared to bank totla loan book of 1.2 Trillion and assets of 2.4 Trillion. Hence govt borrowing makes up a small percentage of the banks loan book, if the returns on T Bills are negligible, banks will simply stop buying them. But KBRR links tbills and the lending rate. So if tbill returns are tiny, then the lending rate will also be very low. Cycle continues.
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