Governor Dr Njoroge hosts the post MPC media briefing to elaborate on the reduced CBR rate and comment on the economy.
NPLs at 12.3% is not an ideal level. A lot of work needs to be done by banks and borrowers to lower the NPLs. The governor is optimistic that the bad loans will go down.
KBRR belongs in the past. We are operating in a modern system and therefore have no need for KBRR.
“We lost a lot of GDP, positive human outcomes, due to the rate caps. These are lessons were now learning,” Njoroge
Based on our calculations, there is an output gap that indicates that the economy can grow even faster.
Moreover, the governor says that the Government’s demand for domestic borrowing is fixed, at KSh 300.1 billion for the 2019/20 financial year. It cannot take any more, even if available.
Pending bills being settled by the government are subject to audit and verification. MDAs were instructed to clear them by the end of November. County governments also had pending bills of KSh 89 billion, which are in the process of being cleared.
There has been a significant flow of deposits to medium-sized banks. Customers are responding to services aligned with their needs.
The transformation of the banking sector continues, including consolidation which improves banks’ resilience and the repeal of interest rate caps.
This time will be different. Banks will not go back to the Wild West behaviour that prevailed before. Banks will be pricing their loans appropriate to the risk. They will be transparent. Banks also need to be more ethical and stop the focus on short-term gains.
More to follow…
