CENTRAL BANK OF KENYA
MONETARY POLICY COMMITTEE
SURVEY QUESTIONNAIRE – COMMERCIAL BANKS
DECEMBER 2012
Central Bank of Kenya Survey of Commercial Banks
Please check the boxes that best answer each topic in your opinion. A glossary of key terms
is attached for your information.
1. Name of establishment ……………….………………………………………………………………..……
2. Please rank in order of priority (i.e. 1, 2 and 3 in that order) the three major sectors to which your
bank lends.
Agriculture and Forestry Trade (Wholesale/Retail)
Real Estate (Residential)
Manufacturing
Real Sector (Commercial)
Mining/Quarrying
Transport and Communication
Building and Construction
Energy & Water
Finance and Insurance Hotels/Restaurants
Other
Private households Please Specify……………………………..…
3. Please rank in order of priority of 1 (most important) to 4 (least important) the major market
segments that your bank lends to.
Consumer Small/Medium (SME) Corporate
Other Please Specify……………………………………
Please indicate the percentage of total lending in a year that go to your top choice above
……………..………………………………………………………………………………………………………………….
4. Please indicate the proportion of credit issued by your bank in the last two months in the following
maturities.
Below 1 year 1-3 years 4-5 years Over 5 years
If the proportions have changed since August 2012, please indicate why……………………………………
………………………………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………………
5. Has your bank introduced any new loan products in the last two months?
Yes No
If yes, please specify the type (deposit/Loan), market segment (consumer/SME/Corporate) and maturity
for the new products ….....................................................................................................
…………………………………………………………………………………………………………………………………………………
6. a) What is your current average level of lending interest rates relative to that in November 2012?
higher by more higher by Same Level lower by lower by
than 2% 1–2% 1– 2 % more than 2%
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Central Bank of Kenya Survey of Commercial Banks
(Please specify) (Please specify)
Please give a reason…………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………………………………………..
b) Please indicate the date of the last change in the lending rate by your bank………………………….
………………………………………………………………………………………………………………………………………………..
7. Please rank on a scale of 1 (less significant) to 4 (more significant) the contribution of the
following factors in the determination of the actual lending interest rates by your bank.
1 2 3 4
a. Profit margins
b. Central Bank Rate
c. Treasury bill rate
d. Administrative costs
e. Cost of funds
f. Country risk rating
g. Return on risk weighted capital
h. Risk profile of customer
i. Quality of collateral
j. Level of capitalization
k. Inflation rate
l. Competition
m. Exchange rate
n. Economic growth
o. Other (specify and rank)
i.
ii.
8. What is your perception on the direction of average commercial banks lending interest rates in the
year 2013 relative to that in 2012?
increase by more increase by Same Level decrease by decrease by more
than 2% 1 – 2% 1 - 2% than 2%
(Please specify) (Please specify)
Please give a reason for your choice………………………………………………………………………………………….…
………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………
………………………………………………….…………………….…………………………………………………
9. Are you aware of what monetary policy entails?
Yes No
If Yes, what were the implications of the monetary policy stance (including liquidity management) in the
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Central Bank of Kenya Survey of Commercial Banks
last two months on your bank’s operations……….....................................................................
……………………………………………………………………………………………………………………………………………..
10. What is the perception on the growth in credit to private sector from your bank in the year 2013
relative to that in 2012?
Higher by more Higher by Higher by Same Level Lower by Lower by more than
than 20% (10-20)% (1-10) % (1-5) % 10%
(Please specify) (Please specify)
Please provide reasons……………………………………………………………………………..................................
……………………………………………………………….………………………………………………………………………..……
11. Did your bank meet its targeted growth in credit to private sector in the last 2 months?
Yes No
If No, please indicate the reasons/challenges encountered……………………………………………………………
12. What is your perception on the direction of average commercial banks deposit interest rates in the
year 2013 relative to that in 2012?
increase by more increase by increase Same Level decrease by decrease by more
than 3% 2 – 3% by 1-2% than 2%
(Please specify) 1 – 2% (Please specify)
Please give a reason for your choice………………………………………………………………………………………….…
…………………………………………………………………………………………….…………………………………………………
13. Please provide an indication of the maximum and minimum deposit interest rates on various products
for your bank as below:
October 2012 November 2012
Minimum Maximum Minimum Maximum
a) Corporate
Demand
0-3 Months
4-6 Months
7-11 Months
1-2 Years
3-5 Years
Over 5 Years
b) Personal
Demand
0-3 Months
4-6 Months
7-11 Months
1-2 Years
3-5 Years
Over 5 Years
Please give an explanation for the trend in deposit rates above……………………………………………….…
………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………
14. The following factors are often cited as determinants of interest rate spread. Please rank the factors
on a scale of 1 (not significant) to 5 (most significant) with respect to your bank. Please tick only
one box per factor.
1 2 3 4 5
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Central Bank of Kenya Survey of Commercial Banks
a) Interest rate risk
b) Country risk
c) Liquidity risk
d) Profit margins
e) Administrative/operational costs
f) Credit risk
g) Treasury bill rate
h) Policy Rates (Central Bank Rate)
i) Cost of funds
j) Inflation
k) Competition
l) Economic growth
m) Central Bank Discount Rate
n) Exchange rate risk
o) Legal risk
p) Others (Specify and rank)
i.
ii.
15. Please rank on a scale of 1 (less significant) to 4 (more significant) the importance of the
following factors in the determination of interest rates on deposits in your bank.
1 2 3 4
a. Level of Liquidity
b. Treasury bill rate
c. Level of Competition
d. Return on invested capital
e. Cash ratio rate
f. Level of capitalization
g. Other (Specify and rank)
i.
ii.
16. a) Does your bank use the Government’s economic growth forecast when planning?
Yes No
If Yes, in what specific areas? .....………………………………………………………………………………………………
………………………………………………………………………………………………………………….……………………………
b) The Government economic growth target for the country in the year 2013 is 5.6%. What is your
expectation?
above 6.0% 5.7 to 5.9% Same Level (5.6%) 5.0 to 5.5% below 5.0% (Please
(Please specify) specify)
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Central Bank of Kenya Survey of Commercial Banks
Please provide a reason for your perception in 16 (b) above on economic growth……………………………
………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………
17. a) Does the inflation rate guide the decision making process in your bank?
Yes No
b) What is your expectation on the overall month-on-month inflation rate in the year 2013 relative
to the 3.25% in November 2012?
increase by more increase by Same Level decrease by decrease by more
than 2% 1 – 2% 1 - 2% than 2%
Please provide a reason for your expectation in 17(b) above on the inflation rate ……………………………
………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………..…………………………………
18. Which of the following currencies constitutes the largest proportion in which your bank lends to the
private sector?
Ksh US$ Sterling Pound £ Euro €
Other (Please indicate)…………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………
19. What is your expectation on the direction of the average exchange rate of the Ksh/USD in the year
2013 compared with the 85.93 at the end of November 2012?
Strengthen by more Strengthen by Same level Weaken by Weaken by more
than 3% 1 – 3% 1 - 3% than 3%
Please provide a reason for your expectation on the exchange rate…….…………………………………………
………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………
20.( a) How would you rate the current level of liquidity in the entire banking system?
Adequate High Very High Low
(b) If your answer to 20 (a) is high/very high/Low, please provide reasons for this level of liquidity
from your bank’s perspective………………………………………………………..………………………………………………..
………………………………………………………………………………………………………………………………………………………
21. Please provide suggestions on how the Government could address the following:
(i) Maintain Exchange Rate stability
………………………………………………………………………………………………………………………………………………………
…………………..………………………………………………………………………………………………………………………
(ii) Maintain the current level of inflation within the target range (2.5-7.5)%
………………………………………………………………………………………………………………………………………………………
………………………..…………………………………………………………………………………………………………………
(iii) Maintain Interest rate stability
………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………
(iv) Enhance economic growth
………………………………………………………………………………………………………………………………………………………
………………………..…………………………………………………………………………………………………………………
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Central Bank of Kenya Survey of Commercial Banks
22. (i) Name and position of person
completing the questionnaire
…………………………………………………………………………………………………………………………………………………
(ii) Date on which questionaire was filled
…………………………………………….......................................................................................................
(iii) Address:
…………………………………………………………………………………………………………………………………………………
(iv) E-mail address (if any)
(v) Telephone Number
(vi) Town/Location
GLOSSARY OF KEY TERMS
1. Central Bank Rate (CBR)
This is the lowest rate of interest that the CBK charges on loans to commercial banks. It is reviewed
and announced by the Monetary Policy Committee at least every two months as part of its decisions.
2. Reserve Requirements
The amounts that banks are required to keep on deposit at the Central Bank based on the legal Cash
Ratio Requirements.
3. Excess Reserves
Bank reserves in excess of the reserve requirement set by the central bank. Bank reserves are banks'
holdings of deposits in accounts with the central bank.
4. Retail Lending Products
These are loans to individuals rather than institutions.
5. Corporate Lending Products
These are loans to institutions rather than individuals.
6. Interest rate risk
The risk borne by an interest-bearing asset such as a loan or a bond, due to variability of interest
rates.
7. Country risk
The risk of investing in a country, dependent on changes in the business environment, that may
adversely affect operating profits or the value of assets in a specific country. For example, financial
factors such as currency controls, regulatory changes, or stability factors such as mass riots, civil war
and other potential events contribute to companies' operational risks. Price controls also bring in
inefficiencies in the market.
8. Credit risk
Credit risk is the risk of loss due to a debtor's non-payment of a loan or other line of credit (either the
principal or interest (coupon) or both). This is proxied by the ratio of gross non-performing loans to
the total loans
9. Liquidity risk
The risk that a given security or asset cannot be traded quickly enough in the market to prevent a
loss (or make the required profit).
10. legal risk
The risk of a loss arising from the uncertainty of legal proceedings
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Central Bank of Kenya Survey of Commercial Banks
SUMMARY OF MPC DECISION ON 7TH NOVEMBER, 2012
The Monetary Policy Committee (MPC) met on 7th November, 2012 to review market
developments and evaluate the outcomes of its monetary policy stance. The
Committee noted that this stance had continued to deliver the desired outcomes of a
decline in overall inflation and exchange rate stability. The Committee also noted
that while there remain risks to the macroeconomic outlook emanating from
continued volatility of international oil prices and high current account deficits,
overall inflation had maintained its decline overtime and exchange rate remained
stable. The Committee therefore concluded that there was adequate space for
easing of monetary policy stance while monitoring the above developments. On the
basis of this, the Committee decided to reduce the CBR by 200 basis points to 11.0
percent.
