WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2010-06-08 Time: 22:00:02 Posted By: News Poster
By Kevin Mwanza
Bank customers are expected to continue incurring high borrowing costs despite lowering of interest rates in the recent past.
Speaking at the launch of Consolidated Bank’s new-look logo, Central Bank of Kenya Governor, Prof Njuguna Ndung’u, said that despite the impressive performance by banks in the first quarter and lowering of interest rates, the cost of lending is still high.
“It is our expectation that all the banks should follow suit to support the economic growth via the support of expanded private sector credit at an affordable cost,” said Prof Ndung’u.
Several banks reduced their base lending rates last month following CBK’s move to cut its CBR rate by 200 basis-points in the last 12 months, coupled with reduced reserve rations and a dropping inflation rate that now stands at 3.9 per cent.
Following the last Monetary Policy Committee meeting last month, CBK indicated that it would not reduce the CBR rate further from the current 6.75 per cent since it had achieved its objectives and the economy was performing well.
Falling interest rates on government securities has also put pressure on the cost of credit as banks shift back to increasing their loan books to boost income from loans as interest from state securities drops.
Other factors that have led to the high cost of credit in Kenya include lack of a credible asset registrar, making it difficult for banks to ascertain the true value and authenticity of securities, and lack of a centralised credit reference bureau.
A study by CBK in partnership with Kenya Bankers Association and Financial Services Deepening found that commercial banks are charging high interest on loans because of drivers located outside the financial services market such as the high cost of verifying collateral and inefficient legal systems.
While projecting an overall four per cent growth in GDP this year, British American Asset Managers indicated that lower interest rates alone would not be enough to encourage more uptake of credit, which is needed to stimulate economic activity in the country.
Prof Ndung’u, however, encouraged banks to adopt agency banking as a means of reducing the cost of doing business, and expanding their services to the unbanked population.
“The agent banking model was designed to assist banks to lower their cost of offering banking services while at the same time improving their earnings as more Kenyans are offered an opportunity to access financial services,” he said.
Following the amendment of the Banking Act through the Finance Act 2009, banks were permitted to use third parties as their agents to provide certain banking services on their behalf.
Already, several banks are using major supermarket chains to provide some of their services — a good example being the agreement between Nakumatt Supermarket and Equity Bank where customers can deposit or withdraw money at the retail chain’s outlets.
M-Kesho, a partnership between Equity and Safaricom’s M-Pesa facility, has also been touted as being one of the pioneer agency banking models as it has converted 17,500 M-Pesa agents to become Equity Bank tellers, though this is not well defined at the moment.
“The M-Kesho deal is ambiguous on what exactly Safaricom agents are gaining,” said Samuel Gichuhi, an investment analyst at Standard Investment Bank. The banking sector remains vibrant with its overall total assets increasing by 21 per cent from Sh1.20 trillion in March 2009 to Sh1.45 trillion in March this year, while deposits increased by 23 per cent to Sh1.14 trillion over the same period.
Profit before tax for the sector increased by a third, from Sh12.8 billion to Sh17 billion.
Original date published: 9 June 2010
Source: http://allafrica.com/stories/201006081239.html?viewall=1