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Interest Rates and Banks Profits

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Not applicable
With the repo now at 9.5% and prime at 13%, the banks margin on lending is 36.8%. When prime was 11.0%, the repo was 7.5%, and banks margin on lending was 46.7%. Shouldn't the margin the banks are allowed to charge remain the same?
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8 REPLIES 8
Brazen
Super Contributor
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Wumpus
Frequent Contributor
Imagine if that was regulated too??
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Not applicable
In the UK the difference is 2%. Why label me a communist instead of willingly trying to help a fellow comrade?
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Preston
Super Contributor
Mr H...Repo rate is always 3.5% below prime.There only time it will change if the govt changes the repo rate and it is in the Govt Gazette. As far as margin is concerned, it is not important cos bank does not get funding necessary at Repo rate.(but that another issue for another day) Second question you posed...? All additional money that is generated by increased interest rate goes to the funding of the Balance of payment....in order to ensure that there are strong fundamental supporting the rand. Hope this help?
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Not applicable
Thanks Preston. I appreciate your help.
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Preston
Super Contributor
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scandal
Super Contributor
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Zanzibar
Occasional Contributor
the past showed that Banks taper off in shareprice over the periods May - August but don't take my word on it - do some homework. regards
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