At the heart of Kenya’s changing financial landscape, NCBA Bank is redefining its role. This is attested to by Muathi Kilonzo, NCBA Investment Bank Managing Director, who makes the sector path a lot clearer with his crucial market insights.
On Wednesday, while addressing the CNBC Africa Power Lunch, Kilonzo depicted the manner in which economic pressures in Kenya, including a lending rate of 15.24 per cent and inflation of 4.15 per cent, were influencing banks and investment measures.
Adapting to risk-based pricing
The most notable transformation in the financial sector is the risk-based pricing system from the Central Bank of Kenya that is reshaping lending policies. As per Kilonzo, despite the lack of credit growth in the private sector, NCBA and other commercial banks are adjusting to the new framework with ease.
He pointed out that the technique is not just transparency and trustworthiness for customers, but also confidence in loan pricing. The system, he added, isn’t about starting from scratch but more about establishing the right way of ensuring that credit keeps growing as the economy changes.
Driving investment and wealth management
Kilonzo also raised the issue of more and more home investors taking part in the Nairobi Securities Exchange (NSE), thus substantially increasing brokerage businesses.
NCBA is taking full advantage of the situation by introducing unit trusts and wealth management, the popularity of which is also going up. By successfully steering clients to diversifying their portfolios, NCBA is actually overtaking the competitors in the field of investment and wealth management.
Sector resilience amid challenges
The banking sector in Kenya still suffers from a high non-performing loan rate of 14 per cent as well as liquidity challenges. Kilonzo alluded to the strengthening of tourist and export sectors such as coffee, despite the decline in manufacturing.
Fuel levy securitisation, a government initiative, will likely clear the power bills in arrears, and thus the NPL load will reduce. “As GDP growth picks up, NPLs will reduce gradually,” Kilonzo foretold while pointing to exports as one of the recovery factors.
Navigating capital market trends
Investors scouring for yield are transforming capital markets in Kenya. The revived market activity is a result of the decline of T-bill rates to 8 per cent. On the other hand, Kilonzo remarked that the stability in foreign exchange reserves and the recent S&P upgrade of the credit rating are economic indicators turning for the better.
NCBA is taking advantage of these changing patterns to the maximum extent possible and directing its focus on the export-oriented industries and the consumer spending that is expected to bring about sustained growth.
A vision for Africa’s financial future
NCBA Bank is revolutionising Africa in terms of innovation, wealth management, and advisory services.
By cleverly handling macroeconomic issues while unlocking potential in capital markets, NCBA is at the forefront of Kenya and Africa financial scene which is changing all the time, a position that assures the bank clients to be winners in a fast-moving and competitive economy.