Key Points:
- NCBA and Stanbic Bank borrowed a combined $12.6 million from KMRC to enhance their mortgage offerings.
- KMRC’s interest income doubled to $2.73 million, boosting profitability to $5.93 million.
- The increased borrowing shows a focus on providing affordable housing loans through partnerships.
NCBA Group, a leading financial services conglomerate controlled by some of Kenya’s wealthiest families, alongside Stanbic Bank Kenya, secured a total of $12.6 million (Sh1.8 billion) in home loans from the Kenya Mortgage Refinancing Company (KMRC) last year. This strategic move highlights their commitment to expanding mortgage offerings by leveraging credit from KMRC, a joint venture of the Treasury and private lenders.
Both NCBA and Stanbic Bank hold a 44 percent stake in KMRC but had not previously utilized funding from the agency. Stanbic Bank Kenya borrowed $6.57 million (Sh936.6 million) from KMRC in the year ending December 2023, while NCBA secured $6.03 million (Sh860 million) within the same period.
Increased mortgage lending through strategic borrowings
The participation of Safaricom Sacco, which took up $391,000 (Sh55.8 million) in loans, alongside the borrowings by NCBA and Stanbic Bank, boosted KMRC’s total loans and advances to primary mortgage lenders to $58.36 million (Sh8.4 billion) from $46.83 million (Sh6.75 billion) in the previous financial year.
This substantial increase in borrowings underscores the lenders’ intention to bolster mortgage offerings, supported by KMRC’s facility that issues single-digit home loans at an interest rate of 9.5 percent.
“NCBA secured a $6.03-million (Sh860.5 million) unsecured facility from the Kenya Mortgage Refinance Company (KMRC) in October 2023. These facilities are repayable over 12 years, with an outstanding principal balance of $6.03 million (Sh860.1 million) as of December 31, 2023,” NCBA detailed in its 2023 annual report.
Stanbic Bank Holdings, the parent company of Stanbic Bank, did not provide further specifics on its KMRC facility but emphasized its significance in supporting borrower clients.
“We assisted our clients in overcoming financial challenges by delivering tailored financing solutions through risk-based pricing, affordability assessments, facility restructuring, and partnering with the government via KMRC to offer affordable housing solutions,” stated Stanbic Holdings.
Other lenders have reduced their outstanding KMRC facilities as they began repayments on previously disbursed funds. Absa Bank Kenya remains the largest primary mortgage lender utilizing KMRC funds, with an outstanding balance of $19.66 million (Sh2.8 billion) as of December 2023, followed by KCB Bank at $10.53 million (Sh1.5 billion).
Detailed breakdown of KMRC mortgage lending
The amounts in Shillings (Sh bn) are: Absa Bank: 2.81 (approx. $19.66 million), KCB Bank: 1.52 (approx. $10.53 million), Stanbic Bank: 0.94 (approx. $6.57 million), HFC Bank: 0.93 (approx. $6.50 million), NCBA Bank: 0.86 (approx. $6.03 million), and Stima SACCO: 0.47 (approx. $3.29 million).
Other lenders with KMRC facilities, who are also co-owners of the company, include Cooperative Bank, Credit Bank, Housing Finance, Stima Sacco, Tower Sacco, Apstar Sacco (formerly Ukulima), and Unaitas Sacco. KMRC reported an interest income of $2.73 million (Sh390 million) from mortgage lending in the year, more than doubling the $1.37 million (Sh195.3 million) earned in 2022.
This rise in interest income helped KMRC achieve a more than two-fold increase in profitability, reaching $5.93 million (Sh847.7 million) from $2.25 million (Sh321.3 million) previously.
KMRC processed loan applications from 12 lenders, disbursing a total of $67.13 million (Sh9.6 billion) in loans. The company introduced measures to support its lending activities amid economic challenges, such as increasing the household income threshold from $1,065 (Sh150,000) to $1,420 (Sh200,000).
Additionally, KMRC raised the maximum loan threshold from $56,800 (Sh8 million) to $74,250 (Sh10.5 million) nationwide in response to rising property prices.
“These threshold adjustments aim to lower barriers for mortgage entry, push financing further down the market, and thereby accelerate the uptake of affordable home loans across the country,” KMRC stated.
