Commercial banks increased their issuance of loans between October and December 2017 as demand for loans increased.
According to the fourth quarter credit report by the central bank of Kenya, banks issued a total of 2.5 trillion shillings in loans which was a 2.6 percent increase from the previous quarter.
According to the banking regulator, this was as a result of increased activity in the manufacturing, trade and mining sectors following stalled growth owing to the prolonged electioneering period.
Small and medium sized enterprises however continued to bear the brunt of the interest rate capping law, with banks continue to limit credit to the sector over perceived high risks.
Commercial banks have however been changing their business models and deploying more resources towards loan recovery efforts to tame growth in non performing loans.
The central bank credit report indicates that banks are more likely to improve loan issuance in 2018 after adapting to the changing business environment.