Kenyans borrowing Sh2.2billion daily from Fuliza

Mshwari and Fuliza remain top drivers for NCBA revenue growth,  as digital loans continued to increase in the first half of the year.

Contributions from the two channels saw NCBA group disburse Sh457 billion in digital loans, a 35 per cent increase year-on-year from both retail and personal loans.

In the six months to June 30, Fuliza disbursements grew to Sh391 billion, while M-shwari also saw deposits grow to Sh40 billion.

This essentially means that on average Kenyans are borrowing Sh2.2 billion from the overdraft facility.

According to the Competition Authority, M-Shwari currently commands a 34 percent market share in the local digital lending space followed by Fuliza at 25 percent underpinning the importance of the two platforms to NCBA.

NCBA Director of Strategy and Chief of Staff Louisa Wandabwa, said the digital space is still a key driver in the group’s operations despite renewed appetite for brick and mortar expansion by the lender.

 “The digital business in Kenya has seen some pressure on the back of the pricing changes that we made to Fuliza but disbursements have continued to be strong recording a 35 percent increase year on year,” said Wandabwa.

Fuliza is an overdraft facility offered through a partnership with NCBA, KCB Bank Kenya and Safaricom. It allows customers to complete their transactions when they have insufficient funds in their mobile wallet.

M-Shwari on the other hand is offered in a partnership between Safaricom and NCBA Bank Kenya as a savings and loan service that enables M-Pesa customers to save, access credit and earn interest.

The digital arm, according to Wandabwa has continued to bear fruits for the business.

However, following a presidential directive on the reduction of Fuliza rates late last year, the firm says this led to a drop in non-funded income from the segment.

 “Digital income on the non-funded side dropped this year compared to last year, principally Fuliza the volumes are up but the rate reduction in September last year explains this drop,” said NCBA Group Director for finance and strategy David Abwoga.

The increase in digital loan disbursements saw NCBA post a profit after tax of Sh9.3 billion in the first six months of the year to June 30.

This represents a 20.3 per cent rise compared to Sh7.8 billion reported during a similar period last year.

Customer deposits closed at Sh517billion, a 10 per cent up year-on-year growth while operating income went up to Sh31billion, a seven per cent growth

The lender attributed this to opening of new branches that have increased staff cost.

NCBA group managing director, John Gachora said the underlying growth trends in bottom line profitability remained solid compared to 2022 driven by an increase in operating income and a decline in loan impairment charges by 21 per cent.

This even as the group’s operating expenses grew to 24 per cent year on year on the back of inflationary pressures and continued investment in the current 5year strategy which comes to a close in 2024.

Gachora pointed out that while the macro-environment remains challenging particularly rising inflation and forex pressure, the group remains committed to deliver financial solutions that help customers navigate the changing microeconomic environment.

The dollar shortage in the first 6 months of the year saw NCBA’s FX income drop by Sh1 billion compared to last year.

 “As a group 30 percent of our group deposits are foreign currency based and 70 is local based that enabled us give our customers that FX that they badly need in this environment,” said Gachora.

The result saw the lender become second listed lender after Stanbic Bank to declare interim dividends of Sh1.75 per share.