The National Commercial Bank of Africa (NCBA) has reported a substantial increase in digital loan disbursements during the first half of the year, attributing this growth to the popularity of its digital lending platforms, particularly Fuliza and M-Shwari. According to the latest financials for H1 2023, these digital channels have played a pivotal role in the bank’s revenue growth, as the disbursement of digital loans increased by an impressive 35 percent year-on-year for both retail and personal loans.

During the six months leading up to June 30, Fuliza’s disbursements witnessed a remarkable growth to reach Sh391 billion, while M-Shwari’s deposits soared to Sh40 billion. This notable surge in digital loan disbursements translates to an average daily borrowing of Sh2.2 billion from the Fuliza overdraft facility.

The strategic significance of these digital platforms is further underscored by market share statistics provided by the Competition Authority. M-Shwari currently commands a 34 percent market share in the local digital lending space, followed closely by Fuliza at 25 percent. These numbers underscore the pivotal role that these platforms play within the NCBA’s operations.

Despite the emergence of renewed interest in brick-and-mortar expansion, the digital sphere continues to be a crucial driver for the NCBA group. Louisa Wandabwa, the Director of Strategy and Chief of Staff at NCBA, highlighted the continued strength of disbursements within the digital space, reflecting a robust 35 percent increase year-on-year. Wandabwa emphasized that the digital business remains resilient despite recent pricing adjustments made to Fuliza.

Fuliza, a collaborative overdraft facility provided through partnerships with NCBA, KCB Bank Kenya, and Safaricom, enables customers to finalize transactions even when they lack sufficient funds in their mobile wallets. In contrast, M-Shwari is a collaboration between Safaricom and NCBA Bank Kenya, offering a savings and loan service that empowers M-Pesa customers to save, access credit, and earn interest.

While the digital arm of the NCBA continues to thrive, the bank noted a decrease in non-funded income from the digital segment, primarily attributed to a presidential directive that led to a reduction in Fuliza rates last year.

This robust performance in digital lending played a pivotal role in NCBA’s financial results for the first half of 2023. The bank reported an after-tax profit of Sh9.3 billion, marking a significant 20.3 percent increase compared to the same period in the previous year. Additionally, customer deposits demonstrated a noteworthy 10 percent year-on-year growth, closing at Sh517 billion, while operating income recorded a seven percent growth to reach Sh31 billion.

NCBA’s financial progress was somewhat offset by the increased costs associated with the opening of new branches. Despite the challenging macroeconomic environment, John Gachora, the Group Managing Director of NCBA, remained optimistic about the bank’s performance, noting the commitment to delivering financial solutions that assist customers in navigating changing economic circumstances.

Amidst the complex environment marked by factors such as rising inflation and forex pressure, the bank has maintained its dedication to supporting customers by offering the foreign exchange services they require. The first half of the year saw a shortage of dollars, leading to a drop of Sh1 billion in NCBA’s FX income compared to the previous year.

Gachora emphasized the bank’s unique position to address customers’ forex needs due to its balanced mix of foreign currency and local-based deposits. This strategic approach aims to provide customers with the necessary forex resources to navigate the challenging environment.

The bank’s success in this endeavor culminated in its declaration of interim dividends of Sh1.75 per share, making it the second listed lender after Stanbic Bank to do so. As the bank looks forward, it remains committed to leveraging digital platforms and innovative financial solutions to drive its growth strategy and continue delivering value to its customers.

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