Kenya: Bad Loans Balloon as Top Banks Face Tough Covid-19 Test

Kenya: Bad Loans Balloon as Top Banks Face Tough Covid-19 Test

Bad loans for Kenya’s top nine banks by assets have increased by Sh82.5 billion in the full-year period between March last year and March this year, highlighting how Covid-19 has been devastating to local banks.

The lenders that have released their results for Quarter One this year have posted a total of Sh339.9 billion in bad loans, which is a 32 per cent rise from the Sh257.4 billion non-performing loans (NPLs) in March last year.

At the same time, the ratio of these gross NPLs to total loans has also increased from 12.5 per cent to 14.5 per cent, underlining a worrying year for lenders.

An analysis shows that KCB Group’s share of bad loans in the period grew to Sh98 billion in March, a staggering 48 per cent up from Sh66.2 billion in a similar period last year.

Sh6.37 billion

The lender reported a marginal 1.8 per cent rise in net profit for the quarter, from Sh6.37 billion in the review period compared to Sh6.26 billion last year after making lower returns from mobile lending to reduce defaults.

"Overall performance was largely impacted by lower non-interest income due to subdued digital lending on reduced disbursements and lower customer transactions," said KCB Chief Executive Joshua Oigara.

Equity Bank meanwhile has recorded a larger profit growth of 64 per cent in net profit in the quarter to Sh8.7 billion, up from Sh5.3 billion last year, majorly driven by interest income.

But the Group’s gross NPLs rose 42 per cent to Sh63.4 billion up from Sh44.6 billion in March last year, underlining a torrid year for the lender, although the bank’s 11.3 per cent NPLs ratio to gross loans is slightly lower than the current industry average of 14.6 per cent.

Co-operative Bank’s NPLs, meanwhile, have risen 63 per cent to Sh51.9 billion up from Sh31.8 billion in the full year between March 2020 and March 2021, while Diamond Trust Bank’s bad loans rose 40 per cent to Sh22.9 billion up from Sh16.6 billion last year.

At the same time, Kenya’s oldest bank, Standard Chartered, has recorded 11 per cent rise in gross NPLs to Sh22.2 billion in March, up from Sh20 billion last year as NCBA posted one of the lowest increases in NPLs during the period, growing by 1.8 per cent to Sh39.5billion from Sh38.8 billion last March.At the same time, I&M’s bad loans grew 11 per cent to Sh24.7 billion in March, up from Sh22.2 billion […]

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