Kenyan Listed Banking Sector Quarterly Earnings and Operating Metrics
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Recent Developments in the Kenyan Banking Sector
Regulation:
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Risk-based Lending- The Central Bank of Kenya has been working on a risk-based lending model to price loans since the Interest
Cap law was repealed in 2019. The model's main goal is to allow banks to lend in line with the estimated risks of each borrower.
Notably, as of November 2022, at least 23 of the banks had their models approved by the CBK, with Equity Bank being the first
commercial bank to roll out the risked-based lending. However, the approval rate for the models has been gradual in a bid to avoid
causing distress to customers through high interest rates. Additionally, the full implementation has also been slowed down as a result
of insufficient data to assess client's risk profile
Regulation of Digital Lenders: The Central Bank of Kenya (CBK) enacted the law to regulate digital lenders, granting the bank the
authority to license and oversee previously unregulated digital credit providers. The regulations were published on 18th March 2022,
and allowed digital lenders a period of six months to acquire licences from CBK and are aimed at protecting borrowers from
uncharacterized practices of unregulated digital credit providers, particularly their high costs, unethical debt collection practices, and
misuse of personal information. The application period for licencing by all operating unregulated digital credit providers elapsed on
17th September 2022, with the CBK announcing approval of only 10 digital credit providers out of the 288 which had applied to be
licenced. For more information see our Cytonn Weekly #49/2021
Cytonn
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