Private sector credit growth rose to a six month high of 13.2 percent in November 2023, aided by higher lending to the real estate, financial services, agriculture and manufacturing segments, despite the rising stock of bad loans in the banking sector.
Latest data from the Central Bank of Kenya (CBK) on domestic credit shows that banks expanded their lending to the private sector by Sh39.6 billion between October and November, to Sh3.85 trillion. On a year-on-year basis, the volume of loans to the private sector rose by Sh449 billion.
The highest growth in new loans in relative terms in the year to November 2023 was seen in the financial services sector, whose stock of outstanding loans rose by 39 percent to Sh160.4 billion.
The loans to the agriculture sector went up by 23.6 percent to Sh142.3 billion, transport by 22.9 percent to Sh357.8 billion and manufacturing by 20 percent to Sh625.9 billion.
On nominal terms, however, the largest volume of new loans went to the manufacturing sector at Sh104.4 billion. The sector, alongside trade, is the biggest consumer of bank loans in the country.
The faster growth in new loans came even as borrowers faced rising interest rates in 2023, as banks sought to keep up with higher cost of money due to a rise in interest rates on government securities.
By the end of October 2023, the CBK data shows, average lending rates stood at 14.16 percent, up from 12.39 percent a year earlier.
