Standard Chartered Bank (StanChart) Kenya has gone against the current market trend by confirming that it will continue to issue unsecured loans to the customer despite competitors shunning such products ahead of new tough loan loss cover rules expected to kick in from 2018.
StanChart shocked the market in August after it was revealed that it had allocated Sh10 billion ($96 million) to unsecured personal loans. This was in sharp contrast with close competitors such as Equity Bank, which were reportedly turning their attention away from risky loans ahead of the coming into force of the new guidelines, technically referred to as International Financial Reporting Standard (IFRS) 9.
StanChart’s Chief Executive Lamin Manjang explained that the Bank’s investments in data analytics would ensure it is well informed when making decisions on risk-based lending.
“We are able to analyse portfolio and within that portfolio, clients that meet our risk threshold,” Mr Manjang was speaking after the bank signed a bancassurance deal with Sanlam in Nairobi Wednesday, Business Daily reported.
“With those clients, we are very comfortable extending additional credit to them. It is not an indiscriminate increase in the loan book, one based on solid data analysis in terms of risk profile.”