The sector contributed 13 per cent of StanChart’s bad loans last year, which saw the lender increase its net loan loss provision to Sh4.1 billion from Sh2.2 billion in 2016.
The manufacturing sector contributed 11 per cent of the total non-performing loans (NLPs) as banks allocated Sh45.8 billion in net loan loss provisions for the year ended December 2017.
StanChart increased its credit provision to cover NPLs by Sh2.5 billion after it adopted the International Financial Reporting Standard 9 in January.
The manufacturing sector has been the biggest contributor to Standard Chartered Kenya’s #ticker:SCBK problem loans in recent years.
The sector contributed 13 per cent of StanChart’s bad loans last year, which saw the lender increase its net loan loss provision to Sh4.1 billion from Sh2.2 billion in 2016.
The manufacturing sector contributed 11 per cent of the total non-performing loans (NLPs) as banks allocated Sh45.8 billion in net loan loss provisions for the year ended December 2017.
“The manufacturing industry has been challenged in many ways and also the retail sector and generally companies that rely on the government and counties for payment have really struggled in NPLs,” said StanChart chief executive Lamin Manjang during the lender’s annual general meeting last Thursday.
Mr Manjang, who also chairs the Kenya Bankers Association, however, expressed optimism for a better outlook in non-performing loans in the banking industry this year.
Wrong investment decisions and mismanagement where capital expenditure was financed using working capital as well as a mismatch where funds for short-term projects were used for long-term investments further strained manufacturers, he said.
The manufacturing sector’s contribution to the gross domestic product dropped from 9.1 per cent in 2016 to 8.4 per cent last year.
StanChart increased its credit provision to cover NPLs by Sh2.5 billion after it adopted the International Financial Reporting Standard 9 in January.
The new accounting standard changed the rule for impairment provision from incurred loss approach to an expected credit loss approach.
