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KCB sees State roads bond unlocking up to Sh30bn of its unpaid loans
Kenya Commercial bank (KCB) Group CEO Paul Russo makes his remarks during the banks Financial Year (FY) 2024 Results announcement at Radisson Blu Hotel on March 12, 2025.
Photo credit: Francis Nderitu | Nation Media Group
KCB Group anticipates unlocking up to Sh30 billion in unpaid loans as the State moves to float a Sh135 billion bond to clear pending bills in the roads sector.
The Kenya Roads Board (KRB) has already received approval to float the bond whose proceeds will be used to settle mounting pending bills and improve liquidity among contractors.
“We don’t yet have an exact number but it should be around Sh25 billion to Sh30 billion. It could get to Sh50 billion but let’s say around Sh30 billion,” KCB Group Chief Executive, Paul Russo, told the Business Daily.
If successful, this would enable the group to trim its stock of bad debt to below the Sh200 billion and improve its non-performing loan ratio to 16.6 percent, aligning it with the industry average.
The Eastern and Southern Africa Trade and Development Bank has been picked as the lead arranger and advisor for the roads bond and it is already in contact will top local banks for the funding.
The Sh135 billion is expected to be used to support KRB in facilitating maintenance budgets for the country’s 239,122-kilometre road network.
The building and construction sector registers the worst non-performing loan ratio in KCB Group’s book at a 60.5 percent, something the management says reflects the legacy pending bills that have tipped contractors who borrowed from the group into default territory.
In the full year ended December 2024, the lender’s loan book took a significant hit with the stock of bad debt having grown by 8.35 percent to Sh225.69 billion pushing the group’s NPL ratio to 19 percent against the industry average of 16 percent.
“We are interested in a solution that secures our funds. We believe that there’s a need to resolve the obligations to the small contractors because those people lost everything and the impact of that money when paid will be massive. The resolution must set parameters that will be complied with and parameters that will resolve for the vast majority of small contractors,” Russo says.
The term of the Committee was initially set to lapse on September 30, 2024, but secured an extension by the National Treasury to March 31, 2025.
As of the latest update tabled on January 31, the Committee has received pending bills claims worth Sh665 billion of which arrears worth Sh474 billion had been scrutinised and only Sh206 billion worth of arrears deemed eligible.
