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Banks get breathing space as stock of bad loans drops to 12pc

Commercial banks’ gross loans stood at Sh2.39 trillion as at the end of March with bad loans taking up Sh302.8 billion or 12.66 per cent of the loans in the period.

Banks get breathing space as stock of bad loans drops to 12pc

Commercial banks’ pile of bad loans dropped in June compared to the previous two months, offering the lenders breathing space as borrowers gradually regained capacity to service credit. Central Bank of Kenya (CBK) governor Patrick Njoroge on Tuesday said the ramping up of recovery efforts by commercial banks’ credit officers also cut into the stock of bad loans.“The ratio of the non-performing loans (NPLs) to gross loans fell to 12 per cent in June from 12.4 per cent in April 2018, reflecting a reduction in the transport and communications, building and construction, tourism, personal/households, and mining and quarrying sectors largely due to enhanced collection efforts,” said Dr Njoroge at a press briefing.Commercial banks’ gross loans stood at Sh2.39 trillion as at the end of March with bad loans taking up Sh302.8 billion or 12.66 per cent of the loans in the period.

A CBK survey conducted in July showed that a large proportion of the stock of bad loans was attributable to delayed payments from government and the private sector and a slowdown in business activity following the prolonged elections in 2017.

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