Millennials now account for more than half of borrowers across various loan products, according to global information and insights company TransUnion’s latest report for Q423.
- They accounted for 51.1 per cent of the principal amount of mobile loans, and 52.9 per cent in personal loans in the last quarter of 2023.
- Millennials also had the highest principal amount (43.7 per cent) of all demographics in low value overdrafts.
- The demographic accounts for 16.2 percent of asset finance.
“Millennials are increasingly becoming the backbone of our credit economy. Their distinct financial behaviours and preferences are shaping the way we think about and offer credit products,” Morris Maina, CEO at TransUnion Kenya said while releasing the quarterly insights.
TransUnion generates the insights from loan data from the company’s 127 subscribers. The subscribing institutions collectively had loan balances totalling KSh 5.03trillion distributed among 29.92 million loan accounts.
Overall, the banking sector accounted for 96.16% of all active loan balances, with Microfinance, fintech and SACCOs accounting for 0.81%, 0.22% and 1.01% respectively. Mobile loans account for 50.61 per cent active loan accounts in Kenya, holding a collective balance of KSh 148.7 billion, but the number of new mobile loans and their value decreased by 20.5 per cent and 9.5 per cent respectively between Q1 2023 to Q4 2023.
Low value overdrafts of less than KSh 6,000 of the principal amount total KSh 13.06 billion and make 34.89% of active loan accounts. TransUnion observed a 15.9 per cent reduction from the previous quarter’s KSh 7.94 billion in the value of new, low value overdrafts booked to KSh 6.68 billion, and a slight increase in the average quarterly limit.
On the other hand, overdrafts over KSh 6000 of the principal amount total KSh 506.6 billion owed by 270,000 borrowers, making up just 2.03% of all active loan accounts.
Other Highlights
Although non-performing loan rates reduced between the first and third quarters of 2023, the number of non-performing active accounts nearly doubled in the same period from 3.89 million to 7.65 million accounts. Despite this, the total value of NPLs grew by only 18%, indicating the rapid increase in non-performing accounts was of low value credit amounts.
Business loans still account for the lion’s share of loan balances at 33.35%, followed by personal loans (21.92%) and mortgages (13.10%).
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