Loan uptake still steady in face of rising prices
Interest rates for foreign currency-denominated loans reduced to a weighted average of 5.97 percent in March from 6.25 percent recorded in February. PHOTO | FILE
Loan uptake remained steady during March, defying volatilities in commodity prices experienced since November last year.
According to the Ministry of Finance State of the Economy report, during March private sector credit grew by 23.7 percent, representing a value of Shs1.082 trillion.
During the period, according to the report, loan approvals grew to the high of 59 percent, becoming the highest rate of approval since January. The approval rate exhibits continued recovery of the economy even as it remains dampened by rising commodity prices.
Personal and household loans, just like in February, constituted the largest share of approved loans, taking up 26 percent while trade to up 23.9 percent.
Building, mortgage, construction and real estate took up 14.2 percent while business, community, social and other services and agriculture took up 10.2 percent and 9.2 percent, respectively.
In terms of value, Shs281b went to personal and household loans, while Shs255b went to trade.
Building, mortgage, construction and real Estate Business, community, social and other services received Shs111b while Shs100b went to agriculture.
Mining and quarrying received Shs90b, manufacturing (Shs65b) while transport, communications, electricity and water received Shs23.7b.
The report also indicates that lending rates increase to 19.35 percent up from 18.84 percent in February for the shilling-denominated loans due to increasing inflationary pressures and outlook which are key considerations by commercial banks while determining the lending rates.
Inflation increased in April, rising to 4.9 percent.
However, interest rates for foreign currency-denominated loans reduced to a weighted average of 5.97 percent in March from 6.25 percent recorded in February.
