This archive report was first published on 10 July 2019.
Published on July 10, 2019, a report by the Kenya Bankers Association revealed that the amount of outstanding loans and advances issued by Kenyan lenders stood at KSh2.5 trillion by the end of 2018, equivalent to 52% of Kenya's real GDP.
This represents a tenfold increase from KSh264 billion in 2003, marking a significant growth in the banking industry over the past 15 years.
However, the report highlighted an alarming trend of persistent growth in non-performing loans in the last five years, with NPLs making up 12% of the gross loans by the end of 2018, up from 5% in 2013.
According to the report, 'There is an obvious focus on the level of NPLs in the market. While that level is not in its historically high levels, its persistence over the past five years is feeding into the banking industry's risk-taking behavior.'
The rise in bad loans is attributed to delayed payments by government institutions and the private sector. To address this issue, Kenyan banks are implementing measures to improve the recovery of loans and advances.
Mr. Jared Osoro, the Director of KBA's Center for Research on Financial Markets and Policy, emphasized the need to ease the challenges faced by households and small businesses to enable them to repay their loans.
Notably, the level of growth in customer deposits has been on an upward trend in the last three years, largely due to deposit mobilization through digital banking platforms and agency banking.
According to the study by KBA's Center for Research on Financial Markets and Policy, tier 3 banks recorded the sharpest growth in deposits in the past three years, with a 33% growth in customer deposits in 2018.
