Banks in Kenya restructured loans amounting to KSh 423.6 Billion, or 13 per cent of total banking sector loans, by the end of June 2021, according to the Central Bank of Kenya (CBK) Annual Banking Supervision Report.
The year-long emergency measures on extension and restructuring of loans from banks announced by the CBK in 2020, due to the adverse effects of lockdowns to contain the spread of the COVID-19 pandemic, ended on March 31, 2021.
These CBK measures were designed to provide relief to borrowers, support the continued operations of businesses, and strengthen the resilience of banks.
Of the amount of loans restructured, 92.3 per cent of the outstanding restructured loans were performing, while 7.7 per cent was non-performing.
Banks entire balance sheet size
According to the Supervision Report, the Balance Sheet size of the entire banking industry grew by 11.4%, from KSh5.4 trillion in December 2020 to KSh6.0 trillion in December 2021.
Banks recorded an 11% increase in customer deposits from KSh 4.0 trillion in December 2020 to KSh4.5 trillion in December 2021.
By the end of March last year, the banking industry had restructured loans amounting to KSh 1.7 trillion, equivalent to 54.8% of the industry’s loan book.
Thus those with performing loans before the measures were put in place but went into arrears after restructuring measures were given 90 days to June 2021 to regularize their repayments.
Out of the KSh 423.6 billion restructured loans at the end of June 2021, 92.3% were performing, while 7.7% were non-performing.
The report says agility will be imperative as banks respond to rapidly changing customer needs and preferences. More broadly, banks must remain mindful of societal needs and concerns.
In particular, CBK said efforts towards greening the financial sector should be accelerated to secure the planet’s sustainability.
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