KCB on Wednesday reported a five-fold increase in average monthly lending to individuals, signalling rising interest in borrowing since the coming into force of a new law capping of interest rates.
The bank said it had lent out Sh6.3 billion in three weeks, disapproving earlier fears that the new loan prices would deter banks from lending to individuals, who are deemed to carry the highest risk in the lending market.
“We were lending Sh1 billion a month in new personal loans under the old regime, but that has now risen to Sh6.3 billion in the past three weeks,” said KCB chief executive Joshua Oigara, adding that most of the lending had come as top-ups on existing loans.
“More than 50,000 customers have topped up their loans since September 1, some applying even before the new rates were gazetted on September 14,” he said.
The KCB boss said the numbers were a confirmation of the fact that the new rates had offered customers an opportunity to refinance their loans, opening new business opportunities for banks.
“There were concerns that banks would refuse to lend, but we have seen a double digit growth in lending – a trend we expect to persist till the end of the year,” he said.
KCB’s loan book grew by Sh27 billion to Sh347.3 billion between June 2015 and June 2016, averaging Sh2.25 billion in additional loans per month.
The bank also reported that it had seen a surge in borrowing on its mobile phone platform KCB M-Pesa, where interest rates are also capped at an annual rate of 14 per cent.
The platform, which attracts an average of 30,000 loan applications per day worth between Sh50 million and Sh100 million (although not all are cleared), hit peak demand last Thursday when it received applications for more than Sh120 million — causing a technical hitch that forced the bank to disengage the system to upgrade capacity. It resumed operation on Wednesday.
