@TheEastAfrican

Equitel loans to attract new 5pc processing fee

8 months ago, 16 Jan 09:19

By: George Kamau

Equity Bank has introduced a five per cent processing fee on its Equitel loans, as it seeks to buttress income that has taken a hit from interest rate capping and slow credit growth. The flat fee silently introduced nearly two months ago, puts Equity at par with other banks operating mobile lending products KCB and CBA, in collecting an upfront commission before charging interest on the loan. Equity Bank has also effected a money transfer commission on its mobile App, Eazzyapp, a product which used to be free for internal cash transfers. Transfers are now charged a fee of Ksh33 ($0.3) per transaction as the regional bank moves to tighten revenue from non-interest income sources. Profit drop The bank which is said to have turned a third quarter profit drop to full year growth, is also loosening its purse strings this year. Management is said to be looking at growing its loan book after a year of conservative lending policy which was largely attributed to a slow economy and interest rate caps. As per last year, the bank was issuing 8,500 loans on a daily basis through the mobile platform whose average size was Ksh8,200 ($82). This means the bank could earn more than Ksh1.2 billion ($12 million) from the processing fee in a year. Commission As at June last year, the bank had disbursed a total of Ksh57 billion ($570 million) through the mobile platform which was officially launched in 2015. The platform earned the bank Ksh949 million ($9.49 million) in commission in the nine months to September last year. During the period, 54.5 million transactions had been conducted through the mobile App service which is now being charged Ksh33 ($0.32). This means the introduction of the transaction fee will earn the bank more than Ksh1.5 billion ($14.5 million) annually. Pricing structures Kenyan banks are tweaking their pricing structures to increase their revenues in what has seen the average cost of credit in the country shoot to 19.1 per cent. This is a 5.1 percentage points above the statutory rate of 14 per cent set by the Central Bank of Kenya. The Banking (Amendment) Act, 2016, which came into force on September 14, 2016, caps loan charges at four percentage points above the Central Bank Rate, (CBR) presently standing at 10 per cent, and requires lenders to pay interest of at least 70 per cent of the CBR on term deposits. Bankers told The EastAfrican that most of them were now charging the highest price possible for services because this does not require authorisation from CBK to enforce. Most banks cite their price on a range basis allowing them to negotiate with potential customers within the margin without attracting the regulator’s curiosity. Any change of pricing or introduction of charges requires CBK’s approval but the Governor Patrick Njoroge has already indicated unwillingness to approve price changes that would negate the purpose of the interest rate caps — to maintain discipline in the sector. President Uhuru Kenyatta signed into law ...
Read More


Category: topnews news business

Suggested

4 hours ago, 00:03
@StandardMedia - By: Dominic Omondi
How Uhuru’s new taxes will affect your life

Cost of mobile money transfers, bank transfers, Internet and kerosene to go up as salaried earners take home less, thanks to mounting taxes. ...

Category: topnews news
4 hours ago, 00:43
@TheStar - By: Star Team
Uhuru gives in on CDF as Kalonzo’s Wiper backs cuts

President Uhuru Kenyatta looked set to have his way last night after Wiper MPs joined ODM colleagues in declaring support for his memorandum and proposed budget cuts.The MPs appeared to soften their o ...

Category: topnews news
3 hours ago, 00:57
@TheStar - By: Julius Otieno And ...
Senators to summon Sonko over Pumwani infant bodies

Senators will summon Nairobi governor Mike Sonko and senior health officers over the discovery of 11 infant corpses at Pumwani Maternity.The Health and Security committees of the Senate yesterday visi ...

Category: topnews news
3 hours ago, 00:57
@TheStar - By: Maurice Alal @ala ...
Depots warned to load trucks with petrol, not water

The Kenya Pipeline Company has directed all depots to ensure trucks are loaded with the right petroleum products.This follows an incident at the Kisumu plant on Tuesday, where 14 trucks were loaded wi ...

Category: topnews news
1 hours ago, 03:24
@DailyNation - By: Ibrahim Oruko
Jubilee MPs issue conditions to accept VAT proposals

The allocations to CDF had not been touched. ...

Category: topnews news politics
2 hours ago, 02:19
@DailyNation - By: Elisha Otieno Ru ...
Fortunes continue to dwindle for once rich tobacco farmers

Poverty is evident in the regions where the crop once flourished and returns are not improving any time soon. ...

Category: topnews news counties

@TheEastAfrican

Equitel loans to attract new 5pc processing fee

8 months ago, 16 Jan 09:19

By: George Kamau
Equity Bank has introduced a five per cent processing fee on its Equitel loans, as it seeks to buttress income that has taken a hit from interest rate capping and slow credit growth. The flat fee silently introduced nearly two months ago, puts Equity at par with other banks operating mobile lending products KCB and CBA, in collecting an upfront commission before charging interest on the loan. Equity Bank has also effected a money transfer commission on its mobile App, Eazzyapp, a product which used to be free for internal cash transfers. Transfers are now charged a fee of Ksh33 ($0.3) per transaction as the regional bank moves to tighten revenue from non-interest income sources. Profit drop The bank which is said to have turned a third quarter profit drop to full year growth, is also loosening its purse strings this year. Management is said to be looking at growing its loan book after a year of conservative lending policy which was largely attributed to a slow economy and interest rate caps. As per last year, the bank was issuing 8,500 loans on a daily basis through the mobile platform whose average size was Ksh8,200 ($82). This means the bank could earn more than Ksh1.2 billion ($12 million) from the processing fee in a year. Commission As at June last year, the bank had disbursed a total of Ksh57 billion ($570 million) through the mobile platform which was officially launched in 2015. The platform earned the bank Ksh949 million ($9.49 million) in commission in the nine months to September last year. During the period, 54.5 million transactions had been conducted through the mobile App service which is now being charged Ksh33 ($0.32). This means the introduction of the transaction fee will earn the bank more than Ksh1.5 billion ($14.5 million) annually. Pricing structures Kenyan banks are tweaking their pricing structures to increase their revenues in what has seen the average cost of credit in the country shoot to 19.1 per cent. This is a 5.1 percentage points above the statutory rate of 14 per cent set by the Central Bank of Kenya. The Banking (Amendment) Act, 2016, which came into force on September 14, 2016, caps loan charges at four percentage points above the Central Bank Rate, (CBR) presently standing at 10 per cent, and requires lenders to pay interest of at least 70 per cent of the CBR on term deposits. Bankers told The EastAfrican that most of them were now charging the highest price possible for services because this does not require authorisation from CBK to enforce. Most banks cite their price on a range basis allowing them to negotiate with potential customers within the margin without attracting the regulator’s curiosity. Any change of pricing or introduction of charges requires CBK’s approval but the Governor Patrick Njoroge has already indicated unwillingness to approve price changes that would negate the purpose of the interest rate caps — to maintain discipline in the sector. President Uhuru Kenyatta signed into law ...
Read More

Category: topnews news business

Suggested

4 hours ago, 00:03
@StandardMedia - By: Dominic Omondi
How Uhuru’s new taxes will affect your life

Cost of mobile money transfers, bank transfers, Internet and kerosene to go up as salaried earners take home less, thanks to mounting taxes. ...

Category: topnews news
4 hours ago, 00:43
@TheStar - By: Star Team
Uhuru gives in on CDF as Kalonzo’s Wiper backs cuts

President Uhuru Kenyatta looked set to have his way last night after Wiper MPs joined ODM colleagues in declaring support for his memorandum and proposed budget cuts.The MPs appeared to soften their o ...

Category: topnews news
3 hours ago, 00:57
@TheStar - By: Julius Otieno And ...
Senators to summon Sonko over Pumwani infant bodies

Senators will summon Nairobi governor Mike Sonko and senior health officers over the discovery of 11 infant corpses at Pumwani Maternity.The Health and Security committees of the Senate yesterday visi ...

Category: topnews news
3 hours ago, 00:57
@TheStar - By: Maurice Alal @ala ...
Depots warned to load trucks with petrol, not water

The Kenya Pipeline Company has directed all depots to ensure trucks are loaded with the right petroleum products.This follows an incident at the Kisumu plant on Tuesday, where 14 trucks were loaded wi ...

Category: topnews news
1 hours ago, 03:24
@DailyNation - By: Ibrahim Oruko
Jubilee MPs issue conditions to accept VAT proposals

The allocations to CDF had not been touched. ...

Category: topnews news politics
2 hours ago, 02:19
@DailyNation - By: Elisha Otieno Ru ...
Fortunes continue to dwindle for once rich tobacco farmers

Poverty is evident in the regions where the crop once flourished and returns are not improving any time soon. ...

Category: topnews news counties
Our App