Tier I banks NCBA Group and Stanbic Bank Kenya borrowed Sh1.8 billion from the Kenya Mortgage Refinancing Company (KMRC) last year, adding to a growing list of firms tapping credit from the joint venture of the Treasury and private lenders, for onward lending.
Although both hold a 44 percent stake in KMRC, they had previously not tapped funding from the agency.
Stanbic Bank Kenya took up Sh936.6 million from KMRC in the year ended December 2023 while NCBA borrowed Sh860 million in the same period.
Safaricom Sacco took up Sh55.8 million in loans as borrowings by the three financial institutions helped lift KMRC’s loans and advances to all 12 primary mortgage lenders who form part of its shareholding to Sh8.4 billion from Sh6.75 billion in the previous financial year to December 2022.
The new borrowings signal the intent of the lenders to double down on mortgages with the KMRC facility supporting the issuance of single-digit home loans at 9.5 percent.
“NCBA had a Sh860.5 million unsecured facility raised from Kenya Mortgage Refinance Company (KMRC) taken in October 2023. The facilities are payable over a period of 12 years and had an outstanding principal balance as at 31 December 2023 of Sh860.1 million,” NCBA notes in its 2023 annual report.
Stanbic Bank Holdings, the parent of Stanbic Bank, did not make further disclosures on its facility at KMRC but highlights the facility as a key part of its strategy to support its borrowers.
“We supported our clients to overcome these headwinds by delivering personalised financing solutions through risk-based pricing, affordability reviews, facility restructures, and partnering with the government via KMRC to provide affordable housing solutions,” Stanbic Holdings stated.
Other lenders marked a reduction in outstanding facilities at KMRC having started payments on previously disbursed funds.
Absa Bank Kenya remains the largest primary mortgage lender borrowing from KMRC with an outstanding balance of Sh2.8 billion as of the end of December 2023 ahead of KCB which has a balance of Sh1.5 billion.
Other lenders with KMRC facilities and who co-own the company, include Cooperative Bank, Credit Bank, Housing Finance, Stima Sacco, Tower Sacco, Apstar Sacco (formerly Ukulima), and Unaitas Sacco. KMRC realised Sh390 million in interest income from mortgage lending in the year, a higher netting than Sh195.3 million in 2022.
The rise in interest income supported KMRC in realising a more than two-fold increase in profitability to Sh847.7 million from Sh321.3 million previously.
KMRC processed loan applications from 12 lenders and disbursed Sh9.6 billion in loans.
The company undertook interventions to support its lending activities against headwinds such as reduced disposable incomes including increasing the household income threshold from Sh150,000 to Sh200,000.
KMRC also changed the maximum loan threshold from Sh8 million to Sh10.5 million across the country in recognition of higher property prices.
“The review of these thresholds aims to reduce entry barriers for mortgages, push financing down market and thus, accelerate the uptake of affordable home loans across the country,” KMRC notes.