KCB Group will see its non-performing loans (NPLs) rise to 12 percent of the gross loans following the acquisition of National Bank of Kenya.
“We expect with NBK consolidation we will increase our NPL ratio up to 12 percent but next year we expect to come to eight percent”, said Joshua Oigara on Friday when announcing the listing of additional shares on Nairobi Securities Exchange (NSE).
Bad loans at NBK rose from KSh2.2 billion in 2012 to KSh31.4 billion by June 2019. The bad loans have been transferred to KCB’s loan book.
KCB intends to intensify recovery efforts to reduce the bad loans in its newly acquired subsidiary, NBK.
Mr. Oigara says that loan recovery is top of the lender’s agenda as it seeks to fully merge NBK into KCB Group within two years.
Furthermore, KCB will see temporary deterioration in its capital adequacy due to NBK’s low capitalization
KCB will invest Ksh7.5B capital into NBK to maintain liquidity and improve fund growth