lending activity in Kenya is expected to remain relatively muted in the months leading up to the ninth-August vote. “We forecast moderate loan growth of 10-15 percent in 2022 for the Kenyan banks under our coverage universe, with most of this kicking in by 2H22. Subsidiaries are also expected to contribute to loan growth as well, especially in the case of Equity and its ongoing expansion into DRC,” the firm said.
However, the investment banking company said that a peaceful election cycle would be beneficial for returns in the financial sector since it would be less intrusive to banks’ business operations. As the industry looks to ascertain how the election plays out, Renaissance Capital projects some deceleration in economic activity during the months leading up to the official campaigns and the eventual vote in the third quarter.
“This could slow lending and transactional activities at the banks. However, we expect this to rebound fairly quickly after the end of the election cycle,” it said.
The firm referred to the net domestic credit trends in Kenya’s banking system in the run-up to the 2017 elections, noting that credit to the private sector remained lacklustre at the time. “While the political landscape could have contributed to this slowdown in growth, we believe that the rate caps which had been introduced in September 2016 could also explain the moderation here” the bank added.
