Their 20 yr honeymoon seem over - all they did previously was to lend to gov at 15% and pay you back 4%-spread of 10% - or well lend at 20% plus (while default/risk rate or npls have been 1-3%) --certainly enough money to pay for expense and leave them with lots of billions. That is why banking sector has been making supernormal profits. Now they've got to work their arse -
1) Deploy more capital (their investors have to dig in or well get bought out by well heeled banks like in Nigeria). It not going to be enough to lend to GoK. Bring in new money as a shareholder and bet on it like everyone else does.
2) Innovate. Find ways to deploy technology to reduce costs.
3) Cut cost,reduce branches and staffs - and deploy more tech - more banking agents, more mobile bankin apps, mobile money.
4) Borrow abroad (float own eurobond)...where you can get money at 1%! and lend locally at 14%.
5) Share infrastructure..no need to have 10 atms in every town by every bank...when one can be shared by all banks.
6) Try other add-on business -bancinsurance, investment banking, forex trading and many other revenue streams.
You don't want to be a banker this year. It going to be very tough 2yrs. I don't see how Uhuru can undo this in an election year.
Good. The KBA cartel has lost grip. Despite their crying wolf expect an increase in loan uptake from SMES and individuals. Now everyone can borrow cheap including govt.
Topic: Banks cannabalize themselves - this will bring interest rate further (Read 1950 times)