(Ecofin Agency) - Equity Group Holdings, Kenya's leading banking group in terms of stock market valuation has set aside 8 billion shillings ($73.7m) to address the credit risks in the first half of 2020. This is almost 8 times the amount in H1 2019.
Outstanding doubtful loans jumped by 56% to 45.6 billion shillings, while net interest income (the income that banks earn from lending) increased by 17%, and loans and advances to customers increased by only 22%. However, the largest part of these bad loans is the result of a measure imposed by the Central Bank to allow companies to breathe a sigh of relief during the period of containment.
“In light of the markets we operate in being characterized by a thriving real estate, tourism, travel, private education, transport, logistics, trade, and commerce, we have determined that 45% of our clients’ loans would need flexible accommodation on loan repayments,” the Bank said.
Under these conditions, the net profit of the holding company is 9 billion shillings, down 24% compared to the performance achieved over the same period in 2019.