NAIROBI, Kenya, Jan 6 – Banks have in the last few weeks been reporting an upsurge in the uptake of personal loans as people borrow to fund various financial obligations after the festivities.
Kenya Comercial Bank (KCB) Group Acting Director of Retail Banking Tom Ndalo pointed out that the money is being invested wisely with most of it going towards meeting various commitments such as school fees and other income generating activities.
“This time of the year, we usually experience an upsurge in the number of loans taken by our customers. This is as a result of various reasons; people take loans towards the end of the year for holidays while others take loans when they decide to act on their new year’s resolutions particularly those based on investments,” he told Capital Business.
In the last few years, the market has been awash with easy credit in the form of unsecured loans and credit cards which many financial experts argue is one of the reasons that has seen many Kenyans run into debts and have their properties auctioned.
This has seen many banks blamed for dangling what many perceive to be cheaper loans but which only end up impoverishing the loanees.
Mr Ndalo however defended banks saying the uptake stems from increased financial knowledge among Kenyans, economic development as well as banks\’ continued offers of solutions that meet the customers\’ needs.
“The uptake has largely been contributed by the expanded frontiers of banking that have been offered by many institutions. At the moment, we are able to offer unsecured lending and we are also giving micro-lending to our small customers and we also have the business lending that is beside the traditional corporate lending,” he explained.
This however does not negate the need for financial education, he said. “Most kenyans take loans and use them for the intended purposes but there is still a need to advise them even if they know about financial products,” he maintained.
He said many customers are diligently repaying their loans as demonstrated by the improving non-performing loan portfolios of many institutions.
Compared to the neigbouring companies for example, the local banking industry has been registering a reduction in bad loans as many Kenyans promptly repay their debts which in turn improves the sector’s confidence towards lending.
“In countries like Uganda, most of their non-performing loans (NPL) are above 30 percent while in Kenya, most banks have this at less than 10 percent which is a very good performance by any stand,” Mr Ndalo emphasised.
Going forward, he said the outlook for KCB Group and the industry is general is positive, supported mainly by an expanding economy and the increasing confidence levels in the country.
“A growing and stable economy offers most financial institutions a great opportunity for investors and individuals doing business because as a bank, we are going to have increased deposits, new accounts opened, many customers borrowing funds and thus an increased interest income,” the director added.