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- Lenders tired of risk-based pricing model
Lenders tired of risk-based pricing model
Kenya's #1 newsletter among business leaders & policy makers
Hello there 👋🏿 It's Brian from The Kenyan Wall Street. In today's newsletter, bankers are looking forward to departing from a risk-based pricing model.
Also, Stima Sacco's financial performance looks good; the board says the KUSSCO fiasco was ‘insignificant’.
These and more business stories today
FINANCE
Lenders tired of risk-based pricing model
Stanbic CEO Joshua Oigara
Kenyan banks are pushing for a shift away from risk-based loan pricing toward a standardized reference rate, arguing that the current system complicates rate adjustments and creates inconsistencies across the sector.
The Kenya Bankers Association, led by Stanbic CEO Joshua Oigara, has formally proposed the change to the Central Bank of Kenya (CBK), advocating for implementation by the end of 2025. The envisioned model would function similarly to the Secured Overnight Financing Rate (SOFR) used globally, establishing a uniform benchmark with risk premiums layered on top. Here is why banks want a standardized reference rate…
💡 The Risk-Based Pricing model evaluates borrowers' risk profiles, including credit history, sector exposure, and repayment capacity, enabling banks to set individualized interest rates, allowing each bank to develop its own pricing model.
Today's Poll
Do you think the Risk-Based Pricing model, which allows banks to set individualized interest rates based on a borrower's risk profile, is fair to borrowers? |
Yesterday's Poll Results
Do you think NSE stocks will sustain their gains?
🟨🟨🟨🟨⬜️⬜️ Yes, I'm positive (41.67%)
🟩🟩🟩🟩🟩🟩 No, there will be drawbacks (58.33%)
INVESTMENT
Stima Sacco Shrugs Off KUSCCO Loss
Stima Sacco
Stima Sacco took a KSh 108 million hit from its KUSCCO investment but is brushing it off like pocket change. CEO Gamaliel Hassan isn’t losing sleep over it, pointing out that the amount is a mere drop in its KSh 9 billion cash reserves.
Instead of dwelling on the setback, the Sacco is flexing its financial muscles, reporting a solid 15% income growth in 2024, hitting KSh 10.3 billion. The secret sauce? A 55% surge in investment income and a 7% bump in interest earnings. And just in case anyone thought the KUSCCO loss would sting, Treasurer Mary Maalu made it clear: it’s only a provision, not a write-off—so if the money bounces back, it’ll be a nice little bonus. Here are the details
Breaking down the financials…
🔺Total income grew 15% to KSh 10.3 billion, driven by a 55% surge in investment income (KSh 1.7 billion) and a 7% rise in interest income (KSh 7.9 billion).
🔺Expenses dropped 5% to KSh 4.04 billion, boosting pre-tax surplus by 29% to KSh 6.2 billion.
🔺Assets grew 12% to KSh 66.4 billion, with loans rising 11% to KSh 50.2 billion and deposits up 8% to KSh 46.7 billion.
🔺Membership expanded 10% to 220,650, while dividends increased to 16% and interest rebates remained at 11%.
🔺Core capital-to-assets ratio hit 20.22%, surpassing the 18.8% target, and core capital-to-deposits reached 28.7%, far above the 10% minimum.
CAPITAL MARKETS
Rise Lifts Kenyan Startup Hisa to Global Markets
Rise
Rise, the parent company of Kenyan startup Hisa, has secured a U.S. broker-dealer license through its affiliate, Risevest Financial Securities Limited.
This license enables Kenyan investors using Hisa to access U.S. and global markets more seamlessly. They will benefit from streamlined transactions and expanded investment opportunities. Rise acquired Hisa in September 2024, strengthening its presence in Kenya’s investment landscape. More details here…
OPINION
African Tech Companies are Venturing Outside the Continent
African tech ventures, especially fintechs and asset financing companies, are seeking a foothold outside the continent, including to Mexico and Latin America. On the other hand, an increasing number of Latin American tech ventures are also setting up shop in Africa…
On your watchlist
More Stories:
Mining. LSE-listed Marula Mining’s subsidiary Muchai Mining Kenya has signed a deal with Baosteel Resources South Africa, a subsidiary of the world’s biggest steel producer, to purchase and sell manganese ore from the Kilifi manganese processing plant.
Scandal. Former CEO of the Independent Electoral and Boundaries Commission (IEBC), James Oswago, has been shortlisted among 37 candidates eyeing the chairperson’s position in the electoral body — despite being convicted of corruption offences.
Investment. The African Union (AU) and the European Union (EU) have signed a €20 million (~KSh 2.759 billion) financing agreement to “promote integrated development and capacity building across Africa.”
Capital Markets. The Nairobi Securities Exchange (NSE) has sustained its market rally, which has seen investors’ portfolios grow by KSh 137 billion in 2 months.
Economy. Kenya’s private sector saw slight improvement in business conditions in February, marking its fifth consecutive month of expansion.
Startups. The Covid-19 pandemic and the recent freeze on US aid have exposed the vulnerability of Africa’s healthcare systems but also created the momentum for locally made healthcare solutions, an early stage impact investor in the sector says.
Visit selar.com/fcnairobi to secure your tickets…
What to expect :
💡 Insightful Panel Conversations & Keynotes - Engage with leaders from Kopo Kopo, ALX, Leta, Fingo, and more…
🚀 Startup Innovation Challenge - Pitch your startup for a chance to win up to $12,500 in funding.
🥳Evening Mixer - Great food, drinks, and networking.
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