Kenya Commercial Bank wants to reduce the weight of bad debts inherited from the acquisition of National Bank of Kenya

(Ecofin Agency) – Kenya Commercial Bank (KCB) plans to reduce its bad debts whose balance sheet outstanding has increased following the acquisition of National Bank of Kenya. "You will see more actions, more requests for explanation from our customers who do not repay their loans Said KCB chief executive Joshua Oigara on the sidelines of a meeting with the press and according to reports by Bloomberg.

At the time of its acquisition due to difficulties, National Bank of Kenya presented a financial table revealing an outstanding amount of bad debts representing 49% of the total amount of its loans to various economic actors. In this context, KCB saw the share of bad loans in its loan portfolio increase from 6% to 12%. Its leaders want to reduce it to only 8% over the next 12 months.

Some KCB customers have already begun to feel the weight of this commitment from Kenya Commercial Bank. East Africa Portland Cement, a state-owned cement plant, was forced to sell some of its land holdings to raise the equivalent of $ 25 million for the bank. In the same context, Mumias Sugar, another public company, was forced to be placed under judicial administration to protect the interests of KCB.

The issue of bad debts is a serious challenge in the Kenyan banking sector. As regards listed banks, their overall level rose to 10% at the end of the first half of 2019; a record level and well above the annual average since 2010 which is only 6.5%. Faced with this rise in risk for banks, they continue to hope that the cancellation of the interest rates applicable to bank loans will be canceled in order to achieve better net banking income.

Idriss Linen