NCBA Group borrowers will start paying more for their loans effective November 1, 2023.
In a public notice, NCBA Group disclosed that it would be revising its loan rates to 14.5 per cent from 13 per cent for the shilling-denominated loans.
Subsequently, rates for dollar loans will also increase to 11 per cent from 10.5 per cent.
“Due to the current macroeconomic environment and rising interest rates, we wish to advise that our base lending rate will increase to 14.5 per cent for shilling-denominated loans and to 11 per cent for dollar facilities effective November 8, 2023,” NCBA Bank said in a notice to customers.
The decision was backed by the view that prior policy tightening has yet to fully filter through to the economy and that inflation levels remain within the medium-term target band.
“Given the ongoing transmission of a more restrictive policy stance, extension of credit to the private sector seems to be only robust around consumer loans and business working capital loans- with very little on capital expenditure,” said NCBA in its Monthly EconomicReport for October.
According to NCBA Group’s H1’2023 financial results, it witnessed a faster 16.7 per cent growth in loans as compared to the 10.3 per cent growth in deposits. This led to an increase in the loan to deposits ratio to 56.6 per cent, from 53.5 per cent in H1’2022.
The bank’s asset quality saw an improvement, with the Gross NPL ratio declining to 13.4 per cent in H1’2023 from 13.6 per cent in H1’2022.
This improvement can be attributed to the 15.9 per cent increase in gross loans, which rose to Kshs 317.0 bn from Kshs 273.6 bn recorded in H1’2022.
This increase outpaced the 14.6 per cent rise in Gross non-performing loans, which went up to Kshs 42.6 bn from Kshs 37.2 bn in H1’2022.
In terms of provisions, General Provisions (LLP) saw an increase of 8.9 per cent, going up to Kshs 15.7 bn in H1’2023 from Kshs 14.4 bn in H1’2022.
However, the NPL coverage decreased to 57.8 per cent in H1’2023 from 62.0 per cent in H1’2022.
This decrease can be attributed to the 14.6 per cent increase in gross non-performing loans, which outpaced the 3.5 per cent increase in interest in suspense (rising to Kshs 9.0 bn from 8.7 bn in H1’2022) and the aforementioned 8.9 per cent increase in General Provisions.