This archive report was first published on 13 May 2020.
On May 13, 2020, KCB Group, the country's biggest bank by assets, announced that it had restructured loans worth Sh80 billion in Kenya.
The move aimed to provide relief to customers who were struggling to repay their loans due to the impact of the coronavirus pandemic.
According to Joshua Oigara, the chief executive of KCB, the bank restructured loans running into Sh80 billion, mainly in the form of a three-month moratorium on interest and principal.
The loan restructurings were brokered by the Central Bank of Kenya (CBK) after it became clear that many households and corporate borrowers would struggle to meet their obligations.
As a result, KCB's chunk of renegotiated loans is the biggest by far in both absolute terms and as a proportion of its total loan book, accounting for 15 percent of the bank's Sh535.3 billion total loan book as of December 2019.
Other lenders, including Equity Group, Co-op Bank, and NCBA Group, also renegotiated loans worth Sh176 billion, with KCB's Sh80 billion being the largest portion.
Standard Chartered Bank Kenya and Absa Kenya also disclosed that they had restructured Sh8 billion and Sh8.3 billion loans, respectively.
The move is expected to impact bank earnings, with lenders expected to raise their provisions for the growing bad debt, mostly from the decimated tourism industry.
The CBK has said that it will be more flexible with regard to requirements for loan classification and provisioning for loans that were performing on March 2, 2020, and whose repayment period was extended or were restructured due to the pandemic.
