This archive report was first published on 7 May 2020.
Kenya's banking sector is feeling the effects of the coronavirus pandemic, with the seven largest banks restructuring loans worth Sh176 billion in April.
According to the Central Bank of Kenya (CBK), the restructured loans account for 6.2 percent of the industry's total gross loan book of Sh2.8 trillion.
Most of the restructured loans are in the tourism sector, which suffered from the suspension of international flights into and out of the country starting mid-March.
"In general, the banking sector has started to feel the adverse impact of Covid-19 as a result of slowdown in most economic sectors," the CBK told the Senate Ad Hoc Committee on the Covid-19 Situation.
Requests for extension of personal loans and restructuring of other credit are expected to ramp up in the coming months if the pandemic continues to penetrate, the CBK said.
Loan restructuring means that the terms of the credit facilities are changed, including one or a combination of suspending interest, principal, change of collateral or extension of the tenor.
The trend implies bank earnings will take a major hit this year from a mix of lost interest income and increased provisioning for the piling bad debt.
