49 percent of ‘rich’ Kenyans fall behind loan repayments

Nearly half of all Kenyans with a stable financial footing have fallen behind their loan repayments revealing the extent of the economic distress in the country. This is according to a new survey conducted in August by Collect Pro Limited, covering 221 households with a daily per capita impact above Ksh.2180 ($20). According to the data findings, 49 per cent of the respondents have fallen behind their scheduled loan repayments since the emergence of the pandemic. 10 per cent of the households indicate they are completely unable to meet the rescheduled payments while another 13.6 per cent of respondents have significantly fallen behind the repayments. “This is the most significant finding of the survey and has some indicators of what the lending institutions should anticipate when the period of the renegotiated repayments and the general concessions given under the pandemic come to an end,” notes the survey. The revelations on the repayment distresses comes as banks resume the listing of credit defaulters following the end of a six months moratorium by the Central Bank of Kenya (CBK) at the end of September. “Respondents falling behind in loan repayments should expect a change in their credit rating with their banking institution and possible listings with credit bureaus,” the survey added. The poor repayment partners have already hit hard at banking sector earnings who have already marked increased loan-loss provisioning costs and higher stocks of gross non performing loans (NPLs). For instance, KCB and Equity Group who have recently reported their earnings through nine months to September 30 have revealed higher loan loss provisions at Ksh.20 billion and Ksh.14.8 billion respectively from Ksh.5.8 and Ksh.1.9 billion. Meanwhile, the lenders’ stock of gross NPLs has risen by 228 and 70 per cent to Ksh.97 billion and Ksh.51.8 billion respectively. The growing default risks in bank’s balance sheets is against a significant loan restructures by lenders to cushion borrowers against the economic impact of the COVID-19 pandemic. According to data from the CBK, the loan restructures hit Ksh.1.12 trillion at the end of August to represent 38 per cent of the total banking sector loan book. Of the restructured loans, Ksh.271 billion represented restructured to personal/household loans. The banking sector bad loans ratio hit 13.6 per cent during the same month with notable increases being recorded in real estate and personal loan portfolios. 37.5 per cent of households in the survey indicated they had received loan restructures while a majority 44.9 per cent did not.

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