The Central Bank of Kenya have announced that Kenyan banks have restructured loans amounting to KSh1.63 trillion, equivalent to 54.2% of the total banking sector loan book by the end of December 2020.
In March last year, the Central Bank introduced emergency measures in the banking system in order to offer relief to borrowers affected by the pandemic.
By the end of 2020, personal and household loans amounting to KSh 333 billion had their repayment period extended. Banks also restructured loans amounting to KSh 1.29 trillion issued to sectors like trade, manufacturing, agriculture, and real estate.
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The percent of gross non-performing loans to gross loans increased to 14.1% in December 2020 from 12% in December 2019. The percent of gross non-performing loans to gross loans measures the health of the banking system and a high percent shows that banks are struggling to recover issued loans and interest on the loans.
The pandemic adversely affected businesses in Kenya and limited their ability to repay loans. According to the Central Bank, Kenyan banks registered an increase in non-performing loans in the transport and communication sector, agriculture sector, and the real estate sector in 2020.
Despite the sharp increase in non-performing loans in the past year, the Central Bank of Kenya says Kenya’s banking sector “remains stable and resilient, with strong liquidity and capital adequacy ratios.”