Alarm as loan defaults rise by Sh4bn

• The volume of non-performing loans (NPLs) rose by a whopping Sh4 billion — or 7.1 per cent — to Sh57.5 billion in the three months to June as the burden of servicing loans became too heavy for more borrowers.
• Banks expect NPLs in personal, household and trade sectors to rise and remain unchanged for all the other sectors
• High cost of loans also hit the building and real estate sectors, comprising civil works as well as commercial and residential houses, where the Central Bank says it expects an increase in default rates.
• The economy expanded at the rate of 3.5 per cent in the first quarter of this year compared to a growth rate of 5.7 per cent in a similar period last year.
• Bank executives agree with the assessment of credit officers on the causes of the tightening in credit standards and the subsequent rise in NPLs.

girungu@ke.nationmedia.com