Private sector credit by Saccos increased to 11pc from 9.3pc as borrowers sought alternative lending avenues to meet their expenses.
This saw Saccos realized an increase in their share of credit to the private sector to 15.5pc in August compared to 15.1pc in July as that of commercial banks declined to from 84pc to 83.6pc while that of micro finance institutions stagnated at 0.9pc.
During the period credit to the private sector by commercial banks declined to 1.3pc in August from 3.7pc in what the Central Bank of Kenya (CBK) Governor Dr Kamu Thugge attributes to the appreciation of the shilling and the lagged effects of monetary policy tightening.
“If we adjust to the exchange rate effect then credit to the private sector would have grown by 4.3pc rather than 1.3pc. But still this is a deceleration in credit to the private sector even after taking into account the impact of the appreciation of exchange rate on loans that were denominated in foreign currency,” said Dr Thugge in his post Monetary Policy Committee briefing on Wednesday.
CBK says the growth in local currency-denominated loans stood at 5.2pc in August, with the foreign currency-denominated loans, which account for about 26pc of total loans, contracting by 10.6pc.
CBK said while the banking sector remains stable and resilient, with strong liquidity and capital adequacy ratios, the ratio of gross non-performing loans (NPLs) to gross loans stood at 16.7pc in August 2024 compared to 16.3pc in June.
“Increases in NPLs were noted in the transport and communication, personal and household, trade, real estate and manufacturing sectors. Banks have continued to make adequate provisions for the NPLs,” said CBK.
In its Tuesday sitting, the Monetary Policy Committee cut the benchmark rate by 75 basis points to 12pc from 12.75pc on account of a decline in overall inflation which had declined to 3.6pc in September 2024 from 4.4pc in August.
