This archive report was first published on 5 October 2019.
Kenya Commercial Bank (KCB) will intensify efforts to recover loans from defaulters of its newly acquired National Bank of Kenya (NBK), effective next year. This move comes as the lender continues its trend of going after defaulters, which has seen Mumias Sugar Company placed under receivership.
According to KCB CEO Joshua Oigara, the lender will demand delivery of its contracts from borrowers, whether they are from NBK or KCB. Oigara stated, “It is true we will demand delivery of our contract for the borrowers, whether it is NBK or KCB. That vigour will continue. So we expect to recover a number of those loans,” during the listing of an additional 143 million shares at the Nairobi Securities Exchange yesterday.
As a result of the acquisition, KCB has inherited a total of Sh31.4 billion bad debts from NBK. Oigara expects KCB’s non-performing loans (NPLs) to increase to 12 per cent before declining to eight per cent next year. Currently, KCB’s NPLs are at seven per cent.
Moody’s, an American rating agency, noted that NBK’s high stock of problem loans and low capital levels would immediately weaken KCB’s financial position. However, Moody’s expects KCB’s capital adequacy to remain above regulatory requirements and that of global peers over the transition period.
