Personal loans account for largest portion issued by banks

Personal or household loans still account for the largest portion of loans issued by the banking sector at 25.11 percent of the total 2.16 trillion shillings. 

It is closely followed by trade and real estate sectors at 19.28% and 16.05 percent respectively.

The sectors also contributed to the highest proportion of gross non-performing loans which stood at 264.62 billion shillings as at the end of 2017.

The continued rise in the share of personal loans could be attributed to a rapid growth in short term personal or household loans issued through mobile phones by various financial services outlets and as at December last year, personal loans amounted to Ksh 542.1 billion, with gross non-performing loans standing at Ksh 43.1 billion.

In this category there were 6.7 million accounts.

Trade on the other hand had access to Ksh 416 billion with Ksh 78.3 billion in NPLs.

Real estate which is part of the Big Four Agenda also attracted a significant amount of credit at Ksh 346.4 billion.

According to CBK the value of mortgage loan assets outstanding increased from Ksh.219.9 billion in December 2016 to Ksh.223.2 billion in December 2017, representing a growth of Ksh.3.3 billion or 1.5 percent due to increased appetite for home ownership as opposed to rentals.

Another critical Big Four component, manufacturing, received 12.6 percent of total loans at Ksh 272.2 billion.

However, agriculture which is a critical sector towards attaining food security continues to be stifled of credit despite contributing almost a quarter of the country’s GDP.

With 91,940 active loan accounts, gross loans amounted to Ksh 79.98 billion as NPLs stood at Ksh 8.98 billion.

CBK notes that the largest proportion of the banking sector gross loans and advances were channeled through the Personal/ Household, Trade, Real Estate and Manufacturing Sectors which accounted for 73.08 percent of gross loans in December 2017.

This is an increase from 70.89 percent in 2016.

Personal/Households, Trade and Real Estate sectors accounted for the highest number of loan accounts with a total of 97.61 percent.

Trade, Personal/ Household, and Manufacturing and Real Estate sectors accounted for the highest value of non-performing loans by registering 75.07 percent.

This was mainly due to delayed remittances by employers, slow uptake of housing units and delayed payments from public and private sectors.


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