COVID-19: Banks extend relief as loan restructures hit Ksh.844B

Commercial banks have continued to extend relief to borrowers with loan restructures to cushion against the pandemic hitting Ksh.844.4 billion in June.

The improvement of restructured loans from Ksh. 679.6billion in May is in line with the Central Bank of Kenya (CBK) emergency measures announced in Mid-March to shield borrowers from the economic turmoil arising from COVID-19.

Banks have restructured household loans amounting to Ksh. 240billion or an equivalent 30 percent of all loans in this sector while restructured loans to other sectors have now hit Ksh.604.4 billion.

The total loan restructures now stand at an equivalent 29 percent of the Ksh. 2.9trillion total banking sector loan book from 23.4 percent in May.

On March 18, the CBK asked banks to restructure loans to customers for a minimum period of one year as part of the reserve banks relief package to the economy.

The greatest beneficiaries of the restructures have been the sectors of trade, real estate, transport & communication and manufacturing.

Banks have continued to extend credit to borrowers through the lowering of the cash reserve ratio (CRR) in March having accessed Ksh. 31.4billion from the released pool of Ksh.35.2 billion at the end of June.

The loan restructures have consequently minimized the exposure of banks to defaults with the gross rate of non-performing loans (NPLs) remaining relatively unchanged at 13.1 percent during the period.

The operation of the upcoming SME Credit Guarantee Scheme is expected to support further lending by banks from the current private sector credit growth rate of 7.6 percent.

Borrowers in tourism, real estate, manufacturing, transport & communication have marked the greatest gains from the new credit issuance.