Maturity of the loans from development finance institutions FMO (Dutch) and Proparco (French) was shortened as the lender awaited fresh waivers after failing to meet all debt covenants set by the creditors.
NIC says its net non-performing loans to core capital — which stood at 27.1 per cent in December— was higher than the unspecified threshold agreed with the lenders.
The bank has previously blamed its stock of bad debt on a few large corporate clients.
NIC Bank #ticker:NIC has said it is in good books with lenders of Sh2 billion loans which the bank reclassified from long term to current last year.
The loans from development finance institutions FMO (Dutch) and Proparco (French) were reclassified as the lender awaited fresh waivers after failing to meet some debt covenants set by the creditors.
“For the year 2016, NIC Bank waivers were in place. However, the waivers for the 12 months to December 2017 could only be obtained during this year. Without the 2017 waivers being in place as at 31st December 2016, we reclassified the loans as current,” NIC Bank CEO John Gachora said in a statement.
He added that the lenders have not recalled their capital and that NIC is in a position to repay the debt if asked to.
The conditions are set by the financiers to protect their capital.
“During the year, the Group met all its loan repayment obligations. As at March 31 2017, the bank’s liquidity ratio stood at 40 per cent demonstrating a strong ability to repay if needed. The lenders have not demanded any accelerated repayment whatsoever,” said Mr Gachora.
NIC says its net non-performing loans to core capital –which stood at 27.1 per cent in December— was higher than the threshold agreed with the lenders.
The net bad debt stood at Sh7.8 billion in the period when its core capital was Sh28.9 billion. The bank has previously blamed its stock of bad debt on a few large corporate clients.
The loans that have been reclassified to current include Sh1 billion lent to the parent company by FMO. A Sh593 million loan was lent to NIC Bank Tanzania by Proparco and another Sh395.4 million was provided to NIC Bank Uganda by the same institution.
Editor's note:
This story has been edited to include NIC Bank MD John Gachora’s comments.
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