Residential houses topped the list of Stanbic Holding’s Sh857 million asset seizures last year from individuals and firms that struggled to keep up with loan repayments amid increased interest rates.
The value of seizures of assets rose 49.8 percent from Sh572 million in 2022, marking the highest annual seizures in at least 10 years.
The lender’s latest annual report shows it seized residential property valued at Sh614 million, translating to a 55.8 percent rise from Sh394 million seized in the previous year. Stanbic also repossessed vehicles worth Sh243 million, up from Sh178 million a year earlier.
Prior to the last two years, Stanbic’s seizures had generally been below Sh300 million annually, with the exception of 2018 (Sh381 million) and 2019 (Sh312 million).
“Assets foreclosed as at the end of the year (2023) comprise saloon vehicles, prime movers and trailers, which had been financed by the group under vehicle and asset finance and residential property financed under 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. In general, the Group does not occupy foreclosed properties for business use.”
The Central Bank of Kenya last year hit borrowers with three rises in the central bank rate (CBR), with the last one coming on December 5, when it moved to 12.5 percent from 10.5 percent —in what marked the highest rate since September 5, 2012, when it was at 13 percent.
The increased CBR led to interest rates as high as 26 percent in the banking sector piling pressure on customers especially as the State also rolled out a housing levy and enhanced compulsory savings for retirement.
Stanbic said its weighted average effective interest rates on loans and advances to customers hit 12.33 percent last year, up from 9.7 percent a year earlier, pointing to the increased cost of servicing loans for customers.
The lender’s record seizures for last year also came in the period when the value of restructured loans fell to Sh2.69 billion from Sh7.13 billion.
Customers struggling to repay loans have been turning to lengthening the maturity of their loans in order to keep up with repayments. The loan restructurings for instance hit Sh40.28 billion in 2020 from Sh5.43 billion a year earlier on Covid-19 pandemic economic fallout.
The lender’s mortgage lending hit Sh40.7 billion last year from Sh37.8 billion in the preceding year while vehicle and asset finance lending rose to Sh13.05 billion from Sh10.03 billion.
