KCB Group, has restructured 80 billion shillings in loans to support its customers who have been disrupted by the coronavirus pandemic.
This translates to 15 percent of the group’s KSh535.3 billion total loan book as of December 2019.
“This is mainly in the form of a three-month moratorium on interest and principal,” Joshua Oigara, chief executive KCB Group said.
“You will start to see early impact on bank earnings through increased provisions in the first quarter (ended March),” said Mr Oigara.
The lender has also contributed KSh150 million to the Emergency Response Fund says Oigara.
In March, it announced KSh30 billion credit facility to support individuals and businesses aimed at keeping small businesses afloat and employees in work.
Its FY19 results, KCB reported a 5.0 percent y/y increase in Earnings per Share (EPS) to Ksh 7.86 attributed to a 184.0 percent y/y increase in Loan loss provision (LLP) to Ksh 8.9 billion.
The Central Bank of Kenya said they have witnessed an improvement in liquidity and credit market conditions following the reduction in the Cash Reserve Ratio deployed in March also supported access to credit and loan repayments by customers that were distressed as a result of Covid-19.
Early in the week, Kenyan Bankers Association said 65 percent of its members expect non-performing loans (NPLs) to increase to 14 percent from the current level of NPLs to gross loans of 12.4 percent.
However, only 28 percent of local banks are willing to take up new risks, while 72 percent are unwilling, pointing to low absorption of credit.
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KBA expects the financial sector to remain sufficiently capitalized even under extreme stress.
“That means, therefore, that banks are at a strong position to support businesses navigate the adversities associated with COVID-19 without risking systemic stability. That support is already evident,’’ said KBA Chief Executive Officer Dr. Habil Olaka.