49 percent of rich men and women in Kenya have fallen behind their scheduled loan repayments since the emergence of the pandemic which has caused economic distress in the country according to a survey by Collect Pro Limited.
The survey covered 221 households with a daily per capita impact above 2180 shillings ($20) and 49 percent of the respondents have fallen behind their scheduled loan repayments.
According to the report, 10 percent of the households are completely unable to meet the rescheduled payments because of the financial distress caused by the pandemic that saw many losing their sources of employment. Another 13.6 percent 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 comes to an end,” notes the survey.
A number of backs are being affected by the failure of people to repay loans on time or even repay at all, many banks have indicated 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 percent to 97 billion and 51.8 billion shillings respectively.
However, CBK’s suspension of all banks and other lending institution listing loan defaulters on Credit Reference Bureaus (CRB) came to an end, and now banks and financial institutions have the freedom to resume the listing.
CBK ended the loan restructuring suspension after, restructured loans by banks hit 1.12 trillion shillings at the end of August. The total restructures represent 38 percent of the total banking sector loan book tabulated at Ksh.29 trillion.
The CBK report indicates that personal and household loans account for 271 billion shillings of the restructures, while the majority of 849.5 billion shillings account for restructures to other economic sectors including trade, manufacturing, and real estate.