The total value of repossessed assets in the financial year ended December was a fall from Sh312.3 million in the previous period as loan restructurings softened the increased debt distress in the coronavirus environment.
The value of seized residential properties more than doubled from Sh50 million to Sh120 million in the financial year ended December, showing that more customers struggled to service their mortgages.
Residential houses, saloon vehicles, prime movers and trucks topped the list of Stanbic Bank’s Sh294 million asset seizures from individuals and firms that struggled with loan repayments following Covid-19 economic fallout.
The total value of repossessed assets in the financial year ended December was a fall from Sh312.3 million in the previous period as loan restructurings softened the increased debt distress in the coronavirus environment.
The value of seized residential properties more than doubled from Sh50 million to Sh120 million in the financial year ended December, showing that more customers struggled to service their mortgages.
However, the value of seizures for assets funded under vehicle and asset finance (VAF) dropped by a third to Sh174 million, cutting total repossessions to the lowest level in three years as customers applied for Sh40.27 billion loan restructurings.
“Assets foreclosed as at the end of the year comprise saloon vehicles, prime movers and trailers, which had been financed by the group under VAF and residential property financed personal markets,” said the bank.
“It is the group’s policy to dispose of foreclosed properties on the open market, at market value. The proceeds are used to reduce or repay the outstanding claim.”
Loan restructurings helped soften increased debt distress that set in last year as firms cut salaries and laid-off workers in response to sharp declines in revenues.
Last year’s value of repossessed assets was the lowest since 2017 when it stood at Sh285.6 million and points to the impact of borrowers’ rush to apply for loan restructurings mainly in the form of longer repayment periods.
Renegotiated loans, which are debts that were refinanced, rescheduled, or rolled over after customers’ requests, jumped 7.4 times to Sh40.27 billion last year.
The restructured loans are an equivalent of a fifth of the Sh196.3 billion net loans book that Stanbic held at the end of last year.
“The renegotiations resulted in the continuation of the original financial asset, with no gain or loss recognised as a consequence of the restructuring,” noted the bank.
Stanbic’s restructured loans were part of the Sh1.7 trillion or 57 percent of the banking sector’s loan book that took a similar route as distressed customers sought to escape auctions.
During the year, Stanbic’s mortgage lending grew by 36 percent to Sh34.78 billion, showing that more customers were buying property despite Covid-19 economic hardships.
Property prices were last year discounted due to lower demand, offering an opportunity for rich savers to acquire houses cheaply.
Vehicle and asset financing loan book however posted a 13.3 percent decline to Sh13.13 billion.
Stanbic Bank Kenya chief executive Charles Mudiwa told the Business Daily in a March interview that customers had resumed payments on Sh32 billion or 80 percent of the restricted loans, signaling an improved financial situation.
The lender reported 18.6 percent drop in net profit to Sh5.19 billion in the financial year ended December.
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