Stanbic Bank Kenya is eyeing annual cash advance loans of up to Sh12 billion with a one-month repayment period following the introduction of a new credit scoring model that pegs limit on customers’ transaction value.
The lender introduced the short-term loans product in the first quarter of last year but had slowed down issuance due to elevated default rates, especially during the period when floods and anti-government protests disrupted business activities.
Now the lender says it has developed a new scoring model that allows it to lend up to Sh7 billion a month to customers based on their transaction history. The short-term facility is aimed at customers who do not have a fixed monthly income but do business with the bank.
“This is an area we haven’t done very well in the past because we have largely been in intuitive lending. But now we have developed a credit scoring scorecard that looks at one’s full ecosystem of loans in the industry,” Joshua Oigara, chief executive officer of Stanbic Bank Kenya and South Sudan said in an interview.
“Ultimately, from a zero limit for such clients, especially the self-employed, we are now able to score more than 50 percent of our clients for short-term cash advances. As we build more data points, we can expand it to other clients,” he added.
The limits will be reviewed based on one’s value of transactions and how quickly one settles the loans. Mr Oigara said the cash advances are currently averaging between Sh20,000 and Sh30,000.
Many top lenders have been betting on digital credit to grow their retail loan books, especially to individuals and small businesses in the informal sector.
He said the cash advances will be priced at seven percent as a fee, rivalling other facilities in the banking sector and mobile loans offered by digital lenders.
Mr Oigara said the target this year is to advance at least Sh1 billion in loans per month.
Stanbic is also planning to roll out a digital loan product that will allow customers to tap loans with a repayment period of more than six months. This will, however, target clients with a fixed or predictable monthly income.
“We will provide a limit for such clients, including those in private banking, to access digital loans with a repayment period of up to two years, four years, and finally five years."
Stanbic Holdings, which includes Stanbic Bank Kenya, Stanbic South Sudan, Stanbic Bancassurance Intermediary, and SBG Securities, saw its net profit grow by 12.8 percent to Sh13.71 billion for the year ended December 2024.
The latest profit growth saw the Stanbic board recommend a raise in dividend per share to Sh20.74 amounting to Sh8.2 billion from Sh15.35.
