INFOTRAK HARRIS POLL IN PARTNERSHIP WITH COFEK ON BANK INTEREST RATES docx

INFOTRAK HARRIS POLL IN PARTNERSHIP WITH COFEK ON BANK INTEREST RATES... • Despite clear signals from the Central Bank of Kenya on the direction interest rates ought to take in the marke

INFOTRAK HARRIS POLL IN PARTNERSHIP

WITH COFEK

ON BANK INTEREST RATES

Background on Bank

Lending Rates

• Despite clear signals from the Central Bank of Kenya on the direction interest rates ought to take in the market, commercial banks have been slow to respond Weeks after the monetary policy committee cut its base lending rate from 18 to 16.5 % only few banks have announced a reduction in interest rates This could

be a concern for many borrowers who have had to struggle with a high interest environment

• Furthermore, the Interest Rate Spread in Kenya’s commercial banks may remain wide, unless banks manage to increase their customer deposits

– Interest rate spread can simply be defined as the interest charged by banks on loans

to customers, minus the interest that banks pay on savings deposits.

• Analysts have alluded to the fact that despite many Kenyans urging banks to

increase the interest customers gain on deposits, current deposit levels are still too low to fund the deposit interest.

Kenya Interest Rates

15% reaching an all time high of 84.67% in July of 1993 and a

record low of 0.83% in September of 2003

Committee (MPC) of the Central Bank of Kenya

(CBR), which replaced the 91-day Treasury Bill (TB) rate

Bank interest Rates

Overview on BankTrak Survey Conducted amongst banking

customers in April

Some of us think today’s Customer is……

Much more so than I was a few years ago My needs are more complex I have grown accustomed

to better quality, better service and better value My customers are much more demanding of me

I am an egotist –

I am sensitive I am proud My ego needs the nourishment of friendly and professional contact from you It is important to me that you appreciate my business

I am a perfectionist –

I want the best I can get for the

money I spend If I am

dissatisfied, I will criticize your

products and services to anyone

who will listen Take heed: The

source of my discontent lies in

something you or the products

you sell failed to do Find that

source and eliminate it, or you

will loose my business and that

of my friends as well.

I am busy –

I am called upon to know more, do more, and accomplish more in less time than even two years

ago I am, therefore, jealous of my time and if you cost me time, I will find someone who will

satisfy my wants and needs with dispatch Do not keep me waiting To be forced to return products

because of shoddy workmanship is the greatest waste of all

Reasons why Banking customers stop

using banks they used in the past

What customers like about their

Good reputation Stable bank hence security Offers variety of products and services

Ease of accessibility to credit facilities

Wide branch network Conveniently located Good customer care Affordable operational cost Fast and efficient banking services

What Banks can do to make Customers

Wide ATM network services

Increase tellersFast and efficient banking services

Good quality servicesEase of accessibility, wide banking network

Good customer careAffordable interest rate

INFOTRAK HARRIS POLL IN PARTNERSHIP

WITH COFEK

ON BANK INTEREST RATES

• Using the 2009 Kenya Population & Housing Census as the sample frame, the sample was designed using Population Proportionate to Size (PPS) and mainly entailed;

– Use of stratification, random and systematic sampling in drawing regions to be covered

– Ensuring further distribution by area, age , socio-economic class and gender

– Ensuring that every person in the sampled areas had a known chance of being selected

• Fieldwork was using face to face interviews

– 25 of the interviews were back checked for quality control purposes and data entered twice for validation purposes

– Respondent selection was through random and systematic sampling

• Data processing & analysis was carried using CS-Pro and SPSS 17.0

• The questions asked are highlighted after each graphic presentation

• The Quantitative approach Target the following groups

• Middle class consumers (C1 and C2)

The Quantitative

Approach

• Self employed (Formal)

• Self employed (Informal)

• Employed (Permanent)

• Employed (Casual)

Middle class

consumers

The Sample Defined

1 Quantitative

Face To Face Survey

Face to face interviews

• Middle class consumers

Key areas of exploration

protect consumers in the banking industry?

the banking sector sufficient to cushion

consumers of banking services from capitalistic

and profit oriented nature of commercial banks?

Banking sector

Views on lending Rates

Only 35 % of respondents are satisfied

with CBK role in regulating commercial

banks

58% don’t feel that Commercial

Banks take their increasing

consideration when increasing their

lending rates

94% consider that the standard Lending rates that should be adopted by commercial banks

should be below 10%

(6-10%) 56%

(1-5%) 38%

(Over 10%) 6%

Suggested standard lending rates by respondents

What should be the standard lending rates to be adhered to by all commercial banks in Kenya?

current lending

rates are too high

and should not

exceed the 10%

threshold

 The Research and Consultancy firm, which is currently one of the fastest growing in the region, attributes its rapid growth

to not only innovation, high level of professionalism and dynamism, but also on the excellent caliber of personnel whohave been described by many as “Business Minds who specialize in research” In 2007, Infotrak became a global networkaffiliate of Harris Interactive USA, the 12th largest and fastest-growing market and social research firm in the world

 Infotrak has a long history in conducting research and has carried out similar projects for various clients We have set aworldwide standard in the efficient conduct of scientifically rigorous data collection efforts, which encompass thedevelopment of survey instruments, the design of efficiently executable and scientifically valid samples, surveyadministration and data acquisition, data processing, and analysis

 Today, Infotrak is one of the most authoritative pollsters in Kenya, providing political opinion polling under the InfotrakHarris Poll flagship brand In the recent constitutional referendum in Kenya, Infotrak was the only research firm whichaccurately predicted the outcome of the referendum

 The company has retained both permanent and temporary employees to discharge its activities The team is comprised ofhighly motivated, talented and experienced professionals with academic competence in diverse fields The team hasextensive and proven experience in both qualitative and quantitative research methodologies

About Consumer Federation of Kenya

(COFEK)

• The Consumer Federation of Kenya (COFEK) is an independent, self-funded, multi-sectoral

and non-profit society, registered on 26th March 2010 as a membership society under Cap

108 Laws of Kenya

• COFEK members are ordinary consumers and professionals from various walks of life and

areas spread across the country who see the need to own and support COFEK

vision, mission and values.

• COFEK emphasizes the need for a conducive environment to allow for competitive trade

and business

• The society strongly believes that what is good for the consumer is good for business

• It is the responsibility of COFEK to fight against monopolies and exploitative prices as well

as counterfeits and unfair business practices