Sharp Daily
No Result
View All Result
Friday, June 6, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home News

Kenya’s banking sector grapples with non-performing loans

David Musau by David Musau
February 22, 2024
in News
Reading Time: 2 mins read
Loans CRB

[Image/ Courtesy]

Kenyan Banking Sector Faces Escalating Non-Performing Loans Crisis

The Parliamentary Budget Office (PBO) highlighted a troubling development within Kenya’s banking sector: a surge in non-performing loans prompting banks to adopt more aggressive debt recovery tactics.

The PBO’s findings indicate that financial institutions are preparing to escalate asset seizures, potentially exacerbating the plight of struggling borrowers.

The intensified credit recovery strategy primarily targets collateral provided by borrowers. For secured loans such as mortgages or car loans, banks now possess the authority to seize the assets pledged as collateral in case of default.

RELATEDPOSTS

Kenya’s real estate sector struggles amid surging non-performing loans and interest rate debate

November 7, 2024

Equity Group reports 5% profit decline in 2023

March 28, 2024

Conversely, unsecured loans, reliant solely on the borrower’s creditworthiness without collateral, remain unaffected by these measures.

Data from the Central Bank of Kenya reveals a stark reality: gross non-performing loans in the banking sector surged by 25.7% to KES 635.8 billion in November 2023, up from KES 505.9 billion the previous year.

The non-performing loans to gross loans ratio rose by 150 basis points to 15.3%, underscoring the gravity of the situation. The PBO attributes this spike to high borrowing costs resulting from Central Bank policy rate hikes, compounded by an unfavorable business environment.

Various economic factors contribute to the challenges faced by borrowers, further fueling the rise in non-performing loans.

Currency depreciation, escalating fuel prices, outstanding bills, and new tax regulations collectively erode household income and purchasing power, making it increasingly difficult for individuals to meet their repayment obligations.

Responding to these concerns, the Kenya Bankers Association issued a research note in January 2024, urging a cessation of rate hikes to stem the tide of loan defaults. The industry group emphasized the urgency of addressing the deterioration in loan quality, revealing that approximately KES 130 billion worth of loans turned bad within a year.

As Kenya’s banking sector continues its expansion, it is imperative for borrowers to remain vigilant in managing their financial commitments.

Additionally, policymakers and financial institutions must collaborate to implement measures that promote both economic growth and financial stability. The evolving landscape necessitates proactive strategies to ensure a robust and sustainable financial ecosystem benefiting all stakeholders.

Previous Post

Kenya faces challenges with surging tax refund claims

Next Post

Safaricom slashes interim dividend amid market challenges

David Musau

David Musau

Related Posts

News

Co-op Bank posts KES 6.9 billion profit in Q1’2025

May 16, 2025
Agriculture And Economy
News

Lets get Kenya out of FATF list

May 9, 2025
News

The downside of Impact Investing

May 2, 2025
News

Leadership challenges at the University of Nairobi

April 24, 2025
News

Easter eggs and earnings: Growing your nest egg with CMMF

April 16, 2025
News

Geoffrey Ruku declares KES 377M net worth during CS vetting

April 15, 2025

LATEST STORIES

How Kenya’s E-Mobility shift could redefine urban planning

June 5, 2025

Economic liberators are the real heroes and heroines of the year

June 5, 2025

Affordable retirement planning for small businesses with CURBS

June 5, 2025

How Kenyan banks can modernize without marginalizing

June 4, 2025

Human rights concerns over activists’ treatment in Tanzania

June 4, 2025

Decoding stock-based compensation

June 4, 2025

Comparative advantage is the secret to real economic take off

June 4, 2025

Understanding inflation and its impact on everyday life

June 4, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024