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Bank loan defaults rise by Sh21bn despite lower credit cost
Bankers said as more money flowed into the economy, more businesses were submitting repayment plans for their overdue obligations, allowing banks to reclassify these loans from default to performing.
Total bad loans from the banking sector rose by Sh21 billion in the first quarter of the year as defaults rose among households and businesses in the agriculture, trade, and manufacturing sectors.
The increase in bad loans or non-performing loans (NPLs), which partly reversed the decline of Sh46 billion seen in the fourth quarter of 2025, came despite falling interest rates, which have lowered the cost of servicing loans for borrowers.
