• A total loan amounting to Sh1.38 trillion have been restructured (46.5 per cent of the total banking sector loan book of Sh2.97 trillion) by the end of October.
• The growth in private sector credit stood at 7.7 per cent in the 12 months to October.
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Central Bank of Kenya Governor Patrick Njoroge has announced that the current accommodative monetary policy stance remains appropriate, hence decided to retain the Central Bank Rate at 7 per cent.
This was agreed during the Monetary Policy Committee, which met on Thursday, against a backdrop of the continuing global Covid-19 pandemic, and measures taken by authorities around the world to contain its spread and impact.
MPC assessed the outcomes of its policy measures deployed since March to mitigate the adverse economic effects and financial disruptions from the pandemic.
The survey from the committee shows global economic outlook for 2020 remains highly uncertain, largely due to the resurgence in Covid-19 infections in the advanced economies.
“As a result, the pace of recovery of the global economy in the second half of 2020 has been dampened by the re-introduction of containment measures in some countries. However, global business sentiment has improved with very recent announcements of Covid-19 vaccines, and the conclusion of the US elections.”
Njoroge said inflation remains well anchored, overall inflation stood at 4.8 per cent in October compared to 4.2 per cent in September.
Also, banking sector remained stable and resilient, with strong liquidity and capital adequacy ratios. The ratio of gross non-performing loans (NPLs) to gross loans remained stable at 13.6 per cent in October and August.
“NPL increases were noted in the transport and communication, energy and water, tourism, restaurant and hotels, and real estate sectors, mainly due to the disruption of businesses. The increases in NPLs were partially offset by repayments and recoveries in the trade, manufacturing and building and construction sectors.”
The committee found out that a total loan amounting to Sh1.38 trillion have been restructured (46.5 per cent of the total banking sector loan book of Sh2.97 trillion) by the end of October.
“Of this, personal and household loans amounting to Sh303.1 billion (36.1 per cent of the gross loans to this sector) have had their repayment period extended. For other sectors, a total of Sh1,076.9 billion had been restructured mainly to trade (18.7 per cent), manufacturing (22.7 per cent), real estate (14.5 per cent) and agriculture (12.8 per cent).”
The growth in private sector credit stood at 7.7 per cent in the 12 months to October.
“This is supported by a recovery in demand with the improved economic activity following the easing of Covid-19 containment measures, and accommodative monetary policy.”
The committee noted the continued implementation of the FY2020/21 Budget, including the Economic Stimulus Programme, to stimulate the economy and cushion vulnerable citizens and businesses from the adverse effects of the pandemic.
The MPC will continue to closely monitor the impact of the policy measures so far, as well as developments in the global and domestic economy, and stands ready to take additional measures as necessary.