Pan-African housing financier Shelter Afrique bad loans hit Sh10.4 billion at the end of December last year, the lender reported.
Shelter Afrique consequently says it has put in place an “aggressive strategy” for recovery of the mounting non-performing loans (NPL).
The company says it aims to reduce the dud assets by at least $15 million (about Sh1.53 billion) annually until its NPL ratio is at or below 15 percent.
To achieve this, it says it has put a strategy of collecting distressed assets managed by a new unit dubbed the Special Operations Unit (SOU) that became operational on February 1 last year.
“The overall portfolio (debt and equity) declined by 27 percent from $305 million (about Sh31.2 billion) in the financial year 2017 to $223 million (about Sh22.8 billion) in the financial year 2018 driven mainly by repayments (both normal and accelerated) and modest business underwritten $6.9 million (about Sh707.9 million,” says its annual report.
“54 percent of the overall portfolio is classified as performing while 46 percent non-performing.”
Shelter Afrique says it has also identified key incomplete projects in the NPLs portfolio that need additional financing to be fully completed, adding that several transactions are undergoing reappraisal.
Besides recovering cash in its bid to cut the bad loans, Shelter Afrique, which sunk deeper into the red for the financial year ended December 2018 after its loss extended by 18.5 percent to $9.23 million (Sh940.8 million), also intends to sell the dud assets to third parties and venture capitalists and execute write-offs for the “hardcore cases.”