Non-performing loans rise to Ksh. 117.2 billion
The non-performing loans in the banking sector have risen to 117.2 billion shillings.
Central Bank of Kenya attributes the 9.4 percent increase in none performing loans to high lending rates and challenges experienced in the business environment.
Despite this, banks made 37.3 billion shillings in pretax profit between January and March this year.
Non performing loans among financial institutions have been on the increase since 2011 when they steadily hiked interest rates on loans.
Central Bank of Kenya report indicates that non-performing loans among banks rose from 107.1 billion shillings as at December last year to 117.2 billion shillings in March this year.
The central bank attributes the increase in non performing loans to high lending rates and challenges experienced in the business environment.
CBK says banks continue to deploy enhanced credit appraisal standards to mitigate credit risk.
The sectors which experienced the highest increase in non performing loans during the quarter were Building and Construction, and Real Estate sectors whose NPLs increased by 27.55 per cent and 20.49 per cent respectively.
The report indicates that the sector’s gross loans and advances increased by 3.6 percent to stand at 2.04 trillion shillings in March this year.
The growth in loans was witnessed in all economic sectors except the Building and Construction, Mining and Quarrying, and the Agriculture sectors.
During the period under review, the banking sector’s aggregate balance sheet grew by 3.4 percent to 3.37 trillion shillings as at March this year.
The major asset components were loans and advances, government securities and placements, which accounted for 58.2 per cent, 21.4 per cent and 5.2 per cent of total assets respectively.
CBK says deposits were the main source of funding for the banking sector, accounting for 71.5 per cent of total liabilities.
The deposit base grew by 3.4 percent to 2.41 trillion shillings in March 2015 supported by branch expansion, remittances and increased use of alternative delivery channels of banking services such as agency banking model.
During the period under review, banks made 37.3 billion shillings in pretax profit. This profit represents an 11.7 percent growth on the 33.4 billion shillings they made in a similar period last year.