This archive report was first published on 26 November 2019.
On November 26, 2019, Governor Dr Njoroge hosted a post-MPC media briefing to elaborate on the reduced Central Bank Rate (CBR) and comment on the economy.
Non-performing loans (NPLs) stood at 12.3%, a level that requires significant work from both banks and borrowers to lower. The governor expressed optimism that the bad loans would decrease.
The Kenya Bankers Association's (KBA) Kenya Bankers Roundtable (KBRR) was deemed outdated, as the banking sector operates in a modern system.
"We lost a lot of GDP and positive human outcomes due to the rate caps. These are lessons we are now learning," Governor Njoroge stated.
According to the governor, there is an output gap indicating that the economy can grow even faster. The government's demand for domestic borrowing is fixed at KSh 300.1 billion for the 2019/20 financial year.
Settling pending bills by the government is subject to audit and verification, with MDAs instructed to clear them by the end of November. County governments also had pending bills of KSh 89 billion, which are being cleared.
There has been a significant flow of deposits to medium-sized banks, as customers respond to services aligned with their needs.
The transformation of the banking sector continues, including consolidation, which improves banks' resilience, and the repeal of interest rate caps.
"This time will be different," Governor Njoroge emphasized. "Banks will not return to the Wild West behavior that prevailed before. They will price their loans appropriately to the risk, be transparent, and more ethical, focusing on long-term gains rather than short-term profits."
