The Central Bank of Kenya (CBK) top policy-making organ-the Monetary Policy Committee will hold its next meeting on September 29th, 2020, the bank has said.
At its last meeting in July, the MPC left the benchmark Central Bank Rate (CBR) at 7.0%, the third time in a row.
All eyes will be on how the committee cushions commercial banks from falling earnings as a result of the rise in non-performing loans.
KCB, the most profitable lender in the Kenyan market, has already reported a 40% decline in half-year earnings, with a bulging portfolio of non-performing loans dampening its net profits for the period between January and June this year.
At its July meeting, the MPC observed that non-performing loans as a ratio of the industry’s total loan book was at 13.1% compared to 13.0% in May 2020.
High loan defaults were noted in the manufacturing, trade and personal sectors, due to a subdued business environment.
At that point, banks had already restructured loans amounting to a total of KSh 844.4 billion, 29% of the entire industry’s loan book worth KSh 2.9 trillion by the end of June 2020.
Of this, personal/household loans amounting to KSh 240 billion (30 per cent of the gross loans to this sector) had their repayment period extended.
For other sectors, a total of KSh 604.4 billion had been restructured mainly to trade (9 per cent), real estate (19.5 per cent), transport and communication (16.3 per cent) and manufacturing (14.0 per cent).
A move by the CBK to lower the cash reserve ratio released some KSh 35.2 billion that banks have been lending out. Almost 89.1% has already been lent out to sectors most severely hit by the virus, including firms in the tourism, transport and communication, real estate, trade and manufacturing sectors.
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