The rise comes as the banking sector went through developments in the period under review that includes the introduction of Kenya Banks Reference Rate (KBRR) as well as the introduction of full file information sharing among banks.
“The increase is also attributed to the rise in lending institutions with new micro finance banks coming into the market as well as growth of the financial muscle for commercial banks to lend more, “ argues Cytonn Investments Analyst Shiv Arora.
He also attributed the rise to strong macroeconomic indicators that includes lower levels of inflation.
Wholesale and retail trade, hotels and restaurants received the largest share of loans amounting to Sh286.2 billion followed by the real estate sector that borrowed loans worth Sh262.6 billion.
The manufacturing sector borrowed Sh237.4 billion representing an 11.3 percent of the loan share while the transport, storage and communication sector borrowed Sh130 billion.
The agriculture sector borrowed Sh77.3 billion, building and construction Sh80 billion while financial institutions borrowed Sh50 billion.
Mining and quarrying was the least borrower at Sh23.4 billion. On the other hand government borrowing reduced by 56 percent to Sh204 billion during the period under review from Sh464.9 billion in 2013.
This was part of the government’s plan to reduce domestic borrowing in a bid to bring down interest rates.
“More borrowing is expected in 2015 especially with the ongoing building and construction projects that includes construction of phase one of the Standard Gauge Railway as well as replacement of line five of the Mombasa – Nairobi pipeline with a new one, “Arora added.
He says that all eyes will be keen on the action the new Central Bank of Kenya governor will take in reducing the interest rates spread, currently at 9 percent and one of the highest in the region.