Large banks, which control the lion’s share of the credit market, are less optimist in lending, projecting a growth of 6.5 per cent.
Medium-sized and small banks said they see credit growing by 10.7 per cent and 12.3 per cent respectively this year.
Commercial banks are more optimistic about the prospects of private sector credit growth for this year compared to two months ago, citing renewed borrowing by businesses looking for working capital to recover from the impact of Covid-19 pandemic.
A market perception survey carried out by Central Bank of Kenya (CBK) ahead of the November Monetary Policy Committee (MPC) meeting showed that the lenders project 12-month private sector credit growth at 7.7 per cent by the end of this year, which would beat the 7.1 per cent recorded in December 2019.
This also indicates an increase from the 6.9 per cent projection that the lenders had made in September, when there was less clarity on the path back to recovery for the economy that was just coming out of restrictions meant to curb the spread of the virus.
In the CBK survey, however, large banks were less optimist in lending, projecting a growth of 6.5 per cent. These lenders control the lion’s share of the credit market.
Medium-sized and small banks said they see credit growing by 10.7 per cent and 12.3 per cent respectively this year.
“Respondents expected an increase in aggregate demand in the economy as the economy opens up, favourable weather conditions expected to increase demand from the agricultural sector, improved risk profiling and lower credit risk as business operations,” said CBK in a report detailing the survey.
“However, some respondents cited uncertainty in the business environment due to the emergence of a second wave of the pandemic, unemployment, job losses and pay cuts, which have affected the uptake of credit.”
There are also lingering concerns about dampened demand due to increasing Covid-19 infections in some countries that could impact supply chains if the government reinstates tough restrictions.
Private sector credit was recorded at 7.7 per cent in the 12 months to October following recovery in demand with easing of containment measures.
This was, however a drop from 8.3 per cent in the 12 months to August.
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