Kenyan banks to tighten lending policies ahead of presidential elections, say experts

Feb 10, 2016

Loan growth is likely to remain below trend at 14.6 per cent.

Kenyan commercial banks are expected to tighten their lending conditions amid growing political jitters in the run up to the country's 2017 presidential elections, according to experts.

"Given the presidential elections scheduled for 2017, we believe banks will become more risk averse and thus loan growth is likely to remain below trend at 14.6 per cent," said market analysts Exotix Partners in a new report seen by the East African.

However it expects big lenders will continue to sustain higher margins due to higher yielding retail loans and higher investment in mobile and agency banking.

The firm forecasts that normal loan activity will resume following the election. "Assuming a peaceful outcome, we expect loan growth to pick up thereafter and thus estimate an average growth of 20.7 per cent per annum between Financial Year 2018 and Financial Year 2020," the report
states.

Despite the tightening of the credit conditions, Exotix say Kenya's economy will be growing at 5.5 per cent in 2016, compared with sub-Saharan Africa's average of less than four per cent.

"After a difficult year in 2015, when the country seemed to lurch from one small crisis to the next, the conditions are now coming together for a return of confidence," the report concludes.ADNFCR-2976-ID-801812238-ADNFCR