Standard Chartered Bank Kenya #ticker:SCBK has allocated Sh10 billion to be issued as unsecured personal loans by mid-October, signalling a renewed risk appetite by the lender.
The lender’s plan runs against increased conservatism in the banking industry whose aggregate lending to the private sector slowed down to 2.4 per cent in the 12 months to April.
Lenders have blamed the credit squeeze to the inability to price risk in the wake of interest rate controls, with implementation of greater prudential accounting standards from next year further deterring risk taking.
StanChart says it has done its homework in terms of risk appraisal, giving it the confidence to issue up to Sh7 million to each borrower in the 45-day period running up to October 11.
“In the past one year there was a remarkable slowdown in lending to the retail segment as we adjusted to the rate-cap regime,” StanChart’s CEO Lamin Manjang said in a statement.
“During the period we have put in a lot of work in segmenting our customers and identifying their credit needs.”
Borrowers will enjoy a one-month repayment holiday before the bank effects loan deductions. The offer is available to salaried individuals and can be repaid over a period of up to six years.
A customer borrowing the maximum Sh7 million over the six-year period will incur a total cost of credit of Sh3.57 million according to www.cost-of-credit.com, a website created by the Kenya Bankers Association (KBA) to improve transparency in the lending market.
The cost includes monthly repayments of Sh144,240 and one-off charges amounting to Sh192,500. StanChart says it expects most of the loans will fund purchases of real estate and cars.
StanChart expanded its loan book at a relatively slower pace of 6.4 per cent to Sh116.8 billion in the first quarter ended March when it ramped up its purchase of government debt by 40.1 per cent to Sh96.2 billion.