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Commercial banks rejig loans worth Sh560 billion

By Steven Umidha
Tuesday, June 30th, 2020
Central Bank of Kenya. Photo/Courtesy
In summary
    • Businesses have reviewed operations led by trade, real estate, tourism and the transport industry— which are said to have been hit hard on the back of Covid-19 pandemices
    • Polys Hadjikyriacos, chief business development officer at NETinfo said during a recent webinar with African bank executives the banks need to co-exist with the fintechs and Telcos.  Banks will need to find synergies between themselves, their environments and fintech companies.

Commercial banks have restructured loans in excess of Sh560 billion, reflecting the cash flow burden wrought by the coronavirus pandemic, that has crippled borrower’s ability to repay.

In a statement by Kenya Bankers Association (KBA), the lobby said with over Sh190 billion personal loans, the amount includes loans serviced through mobile payments since April 2020 after the first case of Covid-19 was reported in the country.

The growing risky customer profiles has seen majority of banks register higher non-performing loans (NPLs).

Non-performing loans

“With banks being a critical cog in the economy’s wheel, their collective endeavour is to make sure that under the current challenging circumstances there is minimised disruption,” said KBA’s Chief executive Dr. Habil Olaka, stating that the banking industry has demonstrated leadership in the “arena of response and responsibility.”

He made those remarks during the association’s 58th Annual General Meeting (AGM) in which the banks retained KCB Chief executive Joshua Oigara as its chair for the period 2020/2021, while NCBA’s managing director John Gachora is the vice-chair.

Private sector credit surged to 8.6 per cent in March and ultimately to 9 per cent from 7.7 per cent in February with the CBK instilling back to back cuts to the Central Bank Rate (CBR) and a record first cut to the cash-reserve ration (CRR) in nearly eight years to 4.25 per cent.

Distressed customers

The Central Bank of Kenya (CBK) allowed lenders to offer relief to distressed customers in mid-March after the first positive case of Covid-19 in the country was reported.

The pandemic also threwbanks into the digital lending space, which was initially dreaded by conventional lenders, but the pandemic has since changed consumer’s behaviour.’

About 90 per cent of transactions by lenders is said to be done through digital and online digital platforms as they aim to keep with the guidelines and measures by the ministry of health to curb the spread of the virus.

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