Borrowers in Kenya have defaulted on an additional Sh82.9 billion in bank loans over a span of four months, indicating the economic challenges faced by the country.
This has resulted in the share of non-performing loans (NPLs) reaching a 16-year high, according to the latest data from the Central Bank of Kenya (CBK).
In May, the NPLs ratio, which represents the proportion of loans where no interest or principal has been received for at least 90 days, rose to 14.9 percent from 13.3 percent in December.
The stock of bad loans increased from Sh487.7 billion in December to Sh570.6 billion by the end of April, and the worsening NPLs ratio in May suggests a further rise in loan defaults.
The current NPL ratio of 14.9 percent is second only to the 15.04 percent recorded by the banking sector 16 years ago in June 2007. During that time, the gross loan book was at Sh470 billion, with gross defaults amounting to Sh70.7 billion.
The CBK has noted spikes in NPLs specifically in the manufacturing, trade, real estate, and transport and communication sectors. These trends highlight the challenges faced by these sectors and the potential impact on the banking sector and the overall economy.
