Kenyan commercial banks disbursed KSh99.4 billion of new loans in September, the strongest monthly flow in at least five years, Business Daily reported from central-bank data. The figure exceeded the previous monthly record of KSh88.8 billion set in May. Annual private-sector credit growth reached 10.6% in September. The banking-sector non-performing-loan ratio fell to 13.9%.
The Central Bank of Kenya’s October monetary-policy background data confirmed the 10.6% annual credit-growth figure. Business Daily supplied the absolute monthly loan-flow series and reported that the 13.9% bad-loan ratio was a 44-month low. Together, the figures indicate that lending accelerated while the share of impaired loans declined. They do not show that all banks or borrower groups improved equally.
CREDIT GROWTH ACCELERATED
The September flow represents new lending during the month rather than the banking system’s total outstanding credit. That distinction matters because a strong monthly reading can move more sharply than the stock of loans. The annual growth rate provides the broader measure of expansion across the private-sector portfolio.
Faster credit growth can support investment and working capital, but the composition of lending will determine its economic effect. Household, trade, manufacturing and property exposures carry different risks and transmission channels. Detailed sector data will therefore be important for assessing whether the acceleration is broad-based.
ASSET QUALITY ALSO IMPROVED
The reported decline in the non-performing-loan ratio provides a favourable counterpoint to the lending increase. A lower ratio can reflect recoveries, write-offs or growth in the denominator as well as improved borrower performance. Bank-level disclosures will be needed to identify which factors were most important.
The next CBK credit and banking-sector releases will show whether September marked a sustained trend or an unusually strong month. Attention will focus on loan growth by sector, the stock of non-performing loans and provisioning. A continuation of both credit expansion and improving asset quality would be more significant than either measure alone.