Commercial banks target to intensify credit recovery in eight of the eleven sectors of the economy affected.
The marked high default risk sectors include tourism, agriculture, real estate, construction, financial services, manufacturing, trade, transport and personal and households.
CBK said the ratio of gross non-performing loans to gross loans increased from 9.5 per cent in March 2017 to 9.91 per cent in June 2017.
Commercial banks expect a rise in non-performing loans—which in June rose almost half a percentage to 9.91 per cent of total — in quarter three due to effects of slow economy, political uncertainty and poor weather, an industry survey shows.
“The banks intend to allocate more resources on monitoring and recovery of loans as well as use of external parties in the recovery process,” The Central Bank of Kenya (CBK) said in the report.
The banks target to intensify credit recovery in eight of the eleven sectors of the economy affected. The marked high default risk sectors include tourism, agriculture, real estate, construction, financial services, manufacturing, trade, transport and personal and households.
“The intensified recovery efforts in five sectors —manufacturing, trade, transport, personal/ household, real estate, and financial services sectors — aim at improving the overall quality of the asset portfolio. This is in line with the banks expectations that loan defaults in these sectors will rise during second quarter of 2017 due to slowdown in economic activity.”
Commercial banks are also seeking to pursue clients in the building and construction sector to enhance collections from contractor payments by the national government in the third quarter of the year.
CBK said the ratio of gross non-performing loans to gross loans increased from 9.5 per cent in March 2017 to 9.91 per cent in June 2017.
Despite the harsh business environment, the banking Sector recorded growth in the quarter ended June 30, 2017, compared to the quarter ended March 31, 2017, CBK data showed.
The aggregate balance sheet grew by 2.86 per cent from Sh3.84 trillion in March 2017 to Sh3.95 trillion in June 2017 owing to an increase in investment in government securities during the period.
Gross loans decreased by 0.84 per cent from Sh2.38 trillion in March 2017 to Sh2.36 trillion in June 2017.
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