Browsing: non-performing loans (NPLs)

The loan market in Kenya’s banking sector is going through one of its toughest periods in nearly two decades. With interest rates on the rise and a challenging economic environment, many borrowers—individuals and businesses—are finding it hard to meet their loan obligations.

According to the most recent data from the Central Bank of Kenya (CBK), the proportion of loans that are not being repaid, known as non-performing loans (NPLs), reached 15.0 percent in August 2023, up from 14.2 percent in August 2022. This represents more than $4 billion (Ksh596 billion), the highest it has been in 18 years. The last time Kenya experienced such a high level of loan defaults was back in 2005, when it reached nearly 30 percent.…

Banks in East Africa are empathizing with the loss of livelihood and businesses of their clients by easing off on loan payment demands as the covid-19 pandemic continues to disrupt economies.

In 2020, top East African banks increased provisions for bad debts by over $736 million so as to reduce exposure on businesses and household loans in countries that are most affected by the pandemic.

According to a review of the banks audited financial statements, in 2019 the top eight Kenyan banks by market share tripled their loan loss provisions to $960 million from $263.11 million.

In order to take care of $1.56 billion worth of loans that had been restructured to bail out clients who were most affected by the pandemic, equity bank increased its loan loss provision by $198.6 million making it the greatest hit on its net earnings that the bank has ever experienced. This led the …