In the first half of 2023, a remarkable shift has been observed in the borrowing habits of Kenyan individuals, with the Fuliza digital lending platform taking the lead. A daily average of more than Sh2.2 billion is being borrowed through Fuliza, underlining the increasing reliance on modern digital financial solutions.
This trend is reflected in the recent financial report released by NCBA (National Commercial Bank of Africa), which highlights that Kenyan borrowers have collectively borrowed Sh 391 billion in the six months leading up to June. A significant portion of this borrowing activity is attributed to the growing popularity of digital loans.
The performance of NCBA has also mirrored this digital borrowing surge, recording a notable after-tax profit of Sh9.3 billion for the first half of the year. This marks a substantial 20.3 percent increase compared to the same period last year. The surge in digital loan disbursements, particularly through Fuliza, has played a pivotal role in driving this positive financial outcome.
Fuliza, a collaborative effort between NCBA, KCB Bank Kenya, and Safaricom, stands out as a prominent player in the digital lending landscape. It provides customers with the convenience of conducting transactions even when their mobile wallets are running low on funds. Another key player in this space is M-Shwari, a digital loan platform created through a partnership between Safaricom and NCBA Bank Kenya. Deposits for M-Shwari have reached an impressive Sh40 billion.
Market share statistics illustrate the significant influence of these platforms on NCBA’s revenue growth. M-Shwari commands a substantial market share of 34 percent in the local digital lending sector, while Fuliza closely follows with 25 percent market share.
However, alongside this success in digital lending, NCBA has also faced challenges. A reduction in Fuliza rates, prompted by a presidential directive, resulted in a decline in non-funded income. Despite this, transaction volumes have remained robust, demonstrating a year-on-year increase of 35 percent.
Looking ahead, NCBA remains committed to adapting to a changing economic landscape. In the face of inflationary pressures and currency fluctuations, the bank continues to prioritize delivering financial solutions that cater to customer needs. The bank’s performance has been deemed noteworthy enough for it to declare interim dividends of Sh1.75 per share, solidifying its position in the market.
The evolving trend of digital lending is reshaping Kenya’s financial landscape, with NCBA at the forefront. Fuliza and other digital loan platforms have not only enhanced convenience for borrowers but have also contributed significantly to the bank’s overall performance. As digital financial solutions continue to gain traction, both borrowers and financial institutions stand to benefit from the ongoing transformation.
Photo Souce: Google
By: Montel Kamau
Serrari Financial Analyst
24th August, 2023
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