Kenyan borrowers have defaulted on some Sh. 82.9 billion bank loans over the last four months. This has been revealed by the latest data from the Central Bank of Kenya (CBK).
The data shows that non-performing loans have hit a high of 16 years. The CBK data shows that the non-performing loans (NPLs) ratio hit 14.9 per cent in May from 13.3 per cent in December. The NPLs ration represents the proportion of loans for which no interest or principal has been received for at least three months.
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The stock of bad loans rose from Sh. 487.7 billion in December to close April at Sh. 570.6 billion, with the worsening of the NPLs ratio in May pointing to a further rise in non-payments.
The CBK data further shows that the total loans disbursed by banks increased by 14.7 per cent to Sh. 3.924 trillion, up from Sh. 3.421 trillion. This was an increase of Sh. 503.1 billion, which meant that total NPLs exceeded the total loans disbursed during the year.
The CBK’s Bank Supervision Annual Report 2022 shows that the highest concentration of the NPLs was mainly in trade, manufacturing, real estate, and personal and household sectors in December 2022.
For instance, in December 2022, the value of bad loans in the trade sector hit Sh. 107.2 billion. This was 21.3 per cent of the total loans issued to this sector. This default rate indicated that loans to the trade sector were the riskiest for banks.
The second-largest share of NPLs was recorded in the manufacturing sector. This sector had defaults of up to Sh. 90.88 billion. This meant that 18.1 per cent of the Sh. 530.63 billion loans issued to the sector were non-performing.
At the same time, the real estate sectir had Sh. 81.07 billion in default. This translated to 16.1 per cent of the Sh. 467.17 billion worth of loans that were given to this sector.
