NCBA Bank Kenya’s revenue from its digital platforms Fuliza, Mshwari, and Loop fell 34 percent to Sh2.59 billion in the financial year ended December 2023, hit by reduced charges on the Fuliza overdraft facility.

Disclosures by the lender show that revenue from the three digital products fell from Sh3.92 billion it had earned in a similar period of the previous year.

The drop in revenue came despite an increase in the amount of cash advanced via Fuliza, Mshwari, and Loop. The reduced revenue came in the period NCBA and Safaricom, who partner on the Fuliza loans, cut the product’s tariff.

Loans issued through the Fuliza service, which allows M-Pesa users to overdraw on their balances, grew by 26.9 percent to Sh789.6 billion from Sh622.2 billion. NCBA earns revenue for underwriting the service.

Mshwari loans rose by 17 percent to Sh102.4 billion from Sh87.5 billion, while the value of loans through Loop doubled to Sh1.2 billion from Sh0.6 billion.

NCBA and Safaricom reduced the daily charges on overdraft loans in October 2022, with the fee on loans of between Sh1,000 and Sh1,500 dropping to Sh18 from Sh20.

The lender introduced a three-day window in which borrowers of between Sh101 and Sh1,000 would not be charged any interest. Those borrowing Sh500 beyond the three days now pay a fee of Sh2.50, which was halved from the previous Sh5.

Safaricom also witnessed a fall in revenue from Fuliza. Earnings dipped by 8.3 percent to Sh5.4 billion in the year to March 2023 despite the value of loans issued from the facility rising by 39.6 percent to Sh701.5 billion from Sh502.6 billion.

Lower Fuliza charges have, nevertheless, led to higher disbursements, which could in the future compensate for the foregone fees. The Sh167.4 billion Fuliza disbursements through NCBA imply consumers took overdrafts averaging Sh458.6 million a day in the year under review.

The fall in revenue from digital platforms in Kenya pulled down NCBA Group’s digital business revenue by 15 percent to Sh4.27 billion from Sh5 billion. The growth in revenues from similar products in Tanzania, Uganda, and Rwanda wasn't sufficient to compensate for the revenues lost in Kenya.

NCBA has been diversifying its business model by strengthening both its banking and non-banking subsidiaries.

“Our focus on enhancing the contribution from our subsidiaries has demonstrated success with our subsidiaries contributing 15 percent from two percent in 2022,” said NCBA.

Regional banking subsidiaries contributed 12 percent of the pre-tax profit, while non-banking ones brought in three percent of the pre-tax earnings.