- The rate of non-performing loans eased by 30 basis points in April to 14.2 % compared to 14.5% in February.
- Apart from profits, bank deposits and loan disbursement went up in Q1, an indication of money movement in the market.
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The financial crisis that hit families and businesses following the outbreak of Covid-19 is easing if banks' results for the first three months of the year are anything to go by.
An analysis of Q1 results by leading banks in the country shows they drastically cut loan loss provisions, with Equity Bank Group, the leading in terms of asset base, slashing by a whopping 64 per cent.
This suggests that borrowers who were constrained by the crisis in the early days of the pandemic have started servicing loans.
On Wednesday, the Central Bank of Kenya said the rate of non-performing loans had eased by 30 basis points in April to 14.2 per cent compared to 14.5 per cent in February.
"The banking sector remains stable and resilient, with strong liquidity and capital adequacy ratios. Repayments and recoveries were noted in the transport and communication, real estate, tourism, restaurants and hotels and agriculture sectors," CBK Monetary Policy Committee said.
Last November, half of the Kenyan households struggled to keep up with their loan payments because of the Covid fallout that ruined livelihoods.
A survey by financial recovery firm Collect Pro to understand the burden of debt on individuals brought about by the depressed economy due to Covid-19 showed that 10 per cent of borrowers unable to service their loans.
Equity Bank reported the highest drop in non-performing loans to 11.3 per cent in the quarter ended March, compared to 14.6 per cent the same period last year.
The lender said its strong risk mitigation saw NPL coverage stand at 99 per cent from a mix of provisions at 87 per cent and 12 per cent of credit risk guarantees.
Of the 31 per cent of the loan book, or Sh171 billion Covid-19 accommodated or rescheduled loan book, Sh59 billion has resumed repayment, with Sh5 billion fully repaid and Sh3 billion behind schedule in repayment.
It said that Sh66 billion is expected to resume repayment within six months by September 30.
Other lenders that recorded a significant drop in loan default include Co-operative Bank Group by 50 basis points, Stanbic Bank by 35 basis points and Stanchart by 20 basis points.
Equally, almost all banks reported improved net earnings led by Equity at 64 per cent. KCB Group had the least improvement in after-tax profits at two per cent.
Apart from profits, bank deposits and loan disbursement went up in Q1, an indication of money movement in the market.
Speaking during the post-MPC press briefing on Thursday, CBK Governor Patrick Njoroge said the economy was recovering faster than expected and is expected to exceed pre-Covid-19 standards as more people are vaccinated.
Although the MPC is optimistic, he added that the world has become extremely uncertain but the situation is being monitored.