1.63 trillion shillings have been restructured by the end of December 2020.
Kenyans who had taken loans from banks became a worried lot when Covid-19 came hitting home. As businesses were collapsing, it was obvious that the majority of them could not manage to pay their loans on time. Banks had to think fast.
The Central Bank of Kenya called on all banks to restructure loans in an effort to help cushion their customers against the heat brought about by Covid-19. CBK now says that 1.63 trillion shillings have been restructured by the end of December 2020.
The restructured amount is 54.2 percent of the total banking sector loan book of 3.0 trillion shillings by the end of December and was in line with the emergency measures announced by CBK on March 18 to provide relief to borrowers.
Of this, personal and household loans amounting to 333.0 billion shillings, or 39.6 percent of the gross loans to this sector, have had their repayment period extended.
For other sectors, a total of KES 1.29 trillion had been restructured mainly to trade (21.3 percent), manufacturing (20.4 percent), real estate (15.4 percent), and agriculture (12.4 percent). These measures have continued to provide the intended relief to borrowers.
“The banking sector remains stable and resilient, with strong liquidity and capital adequacy ratios. The ratio of gross non-performing loans (NPLs) to gross loans stood at 14.1 percent in December compared to 13.6 percent in October,” said CBK in a statement.
NPL increases were noted in the Transport and Communications, Trade, Real Estate, and Agriculture sectors. The increases in NPLs were attributable to the subdued business environment, and banks continue to make provisions for the NPLs.
Of the 35.2 billion shillings that were released by the lowering of the Cash Reserve Ratio (CRR) in March, 32.6 billion shillings (92.7 percent) has been used to support lending, especially to the tourism, trade and transport and communication, real estate, manufacturing, and agriculture sectors.