According to Kenyan banks, though moderate, inflation will still be high. So, combining that prospect of weaker economic growth, they are already anticipating a decline in profit margins.
In Kenyan, lending companies expect inflation to stabilize at around 7.5% this year, slightly higher than the 6.8% observed last year.
To curb that inflation, the central bank has raised its key interest rates, like many African countries are doing, making loan repayment difficult. Against this backdrop, bad debts in the Kenyan banking sector rose for the third consecutive month, reaching Ksh540.8 billion ($3.9 billion) in March 2023. The defaulters are mainly in the industrial, real estate, construction, and retail sectors.
The bad debts represent a record 14.6% of lending companies’ loan portfolio, a situation likely to affect profit growth in the sector this year.
To address the situation, the major banks, including Equity, KCB, Co-operative Bank of Kenya, Stanbic Bank, and I&M Bank, made additional provisions for credit losses. But it is uncertain whether other banks have the resources to do so.
According to the Kenya Bankers Association (KBA) quoted by local media, persistently high inflation and weak economic growth could further exacerbate the negative loan loss ratio. And there is a risk that higher rates would make it hard for borrowers to pay their loans.
EBID aims to allocate nearly 41% of its commitments to environmentally and socially impactful projec...
Flutterwave secures Nigerian banking license to offer credit and savings License enables direct d...
M-PESA evolves into major financial platform with 35 million users Telecoms, fintechs expan...
Algeria launches bid for two NGSO satellite telecom licenses Move aims to expand broadband ac...
Coca-Cola unit trains 260+ SMEs in Namibia business skills Program targets women, youth, disabled...
Algeria’s upper house approved a law classifying French colonial rule (1830–1962) as a crime. Authorities framed the legislation as a legal and...
Zimbabwe and Zambia signed an MoU for a 311 km rail link to support mining exports. The project could reduce transport distances to Beira port by...
Funding would modernize signaling on Tema–Mpakadan line Upgrade aims to allow simultaneous train movements Project tied to broader push to...
Morocco selected under $226 million USDA program for 2026 Initiative blends farm support with expansion of U.S. exports Could back...
Nosy Iranja is one of the most iconic island destinations in northwestern Madagascar, lying in the Mozambique Channel about an hour and a half by boat...
Sungbo Eredo, located in southwestern Nigeria near the Yoruba town of Ijebu-Ode, stands as one of the most remarkable yet overlooked monuments of...