Written By:Stanley Wabomba, Posted: Mon, Jan 16, 2012 | ||
The enormous loan built up that commercial banks had accumulated before the base lending rate was increased to the current 18 percent is what is sustaining them.
Equity Bank CEO Dr. James Mwangi says borrowing from banks has reduced enormously due to high interest rates. "However, the banking industry had built an enormous momentum in terms of loans therefore the aggregate impact has not been clearly visible," he added
Dr. Mwangi however says local banks have embraced new measures to counter its effect on their business. "At Equity (Bank), we have started to focus on those who export to ensure our export capacity as a country is not also impaired," he explained.
The Equity Bank CEO terms the situation temporary and projects that interest rate will start stabilizing by mid this year.
"We are excited that the exchange rate is stabilizing and inflation slowly going down and hope that this will start having impacts on interest rates and by June interest rates will start easing and by the end of the year we will go back to where we used to be," said Mwangi
Amid the current reducing appetite for loans locally, he says Equity Bank has negotiated for loans from international players that is being loaned out in foreign currencies to SMEs and corporates.
Said Mwangi: "The appetite for foreign denominated loans has been immense. That is why we have negotiated for loan facilities and we are able to give them out at interest rates of below 10%."
Those in manufacturing, tourism, building and infrastructure for the East African Community region have been keen to take the foreign denominated loan.
Dr. Mwangi says the current economic situation in thye country is short term caused by external factors and he is calling on Kenyans to be resilient because it will soon correct itself.
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Monday, January 16, 2012
Loans:Interest rates to come down mid-2012
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