- Current NPLs at 14.1 per cent
- The banking regulator had given a six-month suspension of CRB listings in April as part of the measures to cushion borrowers hit by the coronavirus pandemic.
The abrupt shrinking of income due to Covid-19 socioeconomic disruption sparked a high loan default among households.
This is likely to see more people blacklisted as families struggle to beat the 90-day loan repayment deadline, a move that is likely to keep many people out of the credit market.
Last week, Business Daily reported that at least 14 million borrowers have been listed by Credit Rating Bureaus, accounting for more than 20 per cent of the country's population.
The blacklisted accounts jumped by a significant 45 per cent in the five months between August and January after the Central Bank of Kenya lifted a three-month moratorium.
The banking regulator had given a six-month suspension of CRB listings in April as part of measures to cushion borrowers hit by the coronavirus pandemic.
The moratorium lapsed in October, allowing financial institutions to start sending names of defaulters to the bureaus.
Lenders, however, offered defaulters 90 days from October 1 to start repaying their loans or get listed with CRBs.
The huge rise in negative listings was driven by mobile loans following a proliferation of digital lenders targeting the banked and the unbanked alike, saddling borrowers with high-interest rates and leaving regulators scrambling to keep up.
Currently, the ratio of gross non-performing loans to gross loans stood at 14.1 per cent in December compared to 13.6 per cent in October last year.
Most increases were noted in transport and communications, trade, real estate and agriculture.
Similar views are held by both local and international credit rating firms that expect the NPLs to rise further this year on sluggish return to economic activities.
For instance, the global credit rating agency projected NPLs to grow to 15 per cent this year.
According to the report, the most vulnerable sectors are trade (18 per cent of the sector's gross loans at end-2019), personal lending (17 per cent), real estate (16 per cent), manufacturing (15 per cent) and tourism (14 per cent).
"We forecast that the sector's non-performing loans ratio will rise to about 15 per cent by end-2020, and even higher in 2021 when debt relief measures are phased out," said the global credit rating firm.
Total loans amounting to Sh1.63 trillion have been restructured (54.2 per cent of the total banking sector loan book of Sh3 trillion) by the end of December, in line with the emergency measures announced by CBK on March 18 to provide relief to borrowers.
Of this, personal and household loans amounting to Sh333 billion (39.6 per cent of the gross loans to this sector) have had their repayment period extended.
For other sectors, a total of Sh1.29 trillion had been restructured mainly to trade (21.3 per cent), manufacturing (20.4 per cent), real estate (15.4 per cent) and agriculture (12.4 per cent).