Senior managers in private commercial banks expect credit expansion in July and August driven by improved economic activity.
A survey conducted by the Central Bank of Kenya (CBK) shows that reduction of the measures to curb the coronavirus pandemic will stimulate economic engagements thereby increasing demand for financing.
Banks expect that demand for personal loans will continue rising as people seek to cope with the effects of the pandemic.
Senior managers in private commercial banks expect credit expansion in July and August driven by improved economic activity.
A survey conducted by the Central Bank of Kenya (CBK) shows that reduction of the measures to curb the coronavirus pandemic will stimulate economic engagements thereby increasing demand for financing.
Banks expect that demand for personal loans will continue rising as people seek to cope with the effects of the pandemic.
“Bank respondents expected the gradual easing of restrictions put in place to fight the pandemic to lead to increased economic activities and trigger the need for financing, hence improved demand for credit in the next two months,” said the CBK in the market perceptions survey conducted last month ahead of the June 25 monetary policy committee meeting.
“This was in addition to the stimulus package pronounced in the budget, expected demand for personal loans to cope with effects of the pandemic, and the need for loan moratoriums and restructuring by businesses.”
The survey was administered on the chief executives and other senior officers of 381 private sector firms comprising 38 operating commercial banks, one operating mortgage finance institution, 14 microfinance banks and 328 non-bank private firms. For credit, the survey was done only on banks.
Sixty-four percent of commercial banks expected the demand would be high to moderate in July and August. The rest projected the demand to be either low or very low.
This was in comparison to the majority or 64 percent of banks who had expected the demand for credit in May and June to be either low or very low.
In the past few months, individuals and firms have asked for restructuring of hundreds of billions in debt in order to continue servicing it.
On economic activity, both banks and nonbank entities expressed optimism for improvement this month and August as businesses adapt to new conditions and regulations to cope with the pandemic.