Trade and personal loans account for highest non-performing loans

Trade and personal loans accounted for the highest share of non-performing loans, data from the Central Bank of Kenya explains. These two also saw an increase in the loan books during the quarter ending September 30th 2015 compared to the quarter ending 30th June 2015.

Non-performing trade loans stood at sh31.8 billion while personal loans were at sh26.46 billion.

In addition, other sectors also recorded included non-performing loan books including real estate, building and construction, transport and communication, manufacturing, agriculture and energy and water.

Sectorial Distribution of NPLs (June 2015 vs. September 2015). Source: Central Bank of Kenya
Sectorial Distribution of NPLs (June 2015 vs. September 2015). Source: Central Bank of Kenya

The CBK’s report further asserts that

The value of gross non-performing loans (NPLs) increased by 0.7 percent from sh123.9 billion in June 2015 to sh124.8 billion in September 2015.

On a positive note however, the quality of assets, measured as a proportion of net non-performing loans to gross loans slightly decreased from 2.7 percent in June 2015 to 2.5 percent in September 2015.

It adds that

The ratio of gross NPLs to gross loans also decreased slightly from 5.7 percent in June 2015 to 5.4 percent in September 2015 since gross loans increased with a higher margin than the increase in gross NPL’s.

During the period under review, 8 out of 11 economic sectors registered marginal increases in NPLs.

Banks continue to deploy enhanced credit appraisal standards to mitigate credit risk.

The sectors which experienced the highest increase in NPLs in the quarter were Financial Services and Energy and Water sectors whose NPLs increased by 11.5 percent and 11.6 percent respectively.

The sector with the highest decrease in NPLs in the same period was Tourism, Restaurant and Hotels sector which recorded a decrease of 14.0 percent.


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