Loan restructuring

In its latest presentation on the status and outlook of Kenya’s banking sector, the Central Bank of Kenya highlighted Kenya’s Banking Sector Policy Response to COVID-19

The report shows that 311 loan accounts in the Building, Construction and Real Estate sectors have been restructured by renegotiating terms of maturity, interest rates and fees.

Another 1,592 loans in the construction industry sectors have received a moratorium on principal or interest while 23 accounts had undergone other forms of restructuring.

According to the report, banks have had to restructure over Ksh. 31.6 billion worth of loans in the real estate sector alone while building and construction accounted for Ksh. 9.1 billion worth of restructure loans.

The two sectors combined accounted for the second-largest amount of restructured loans after the trade sector which accounted for 26.3 percent of the total value restructured of loan accounts in the country.

The profile of restructured loans include in the real estate sector include building contractors, construction material suppliers, property agents, malls and business parks, property developers and construction material manufacturers.

Large construction companies, construction consultants, and SME construction firms have also been affected.

Banks have restructured accounts worth over Ksh. 170.6 billion in total so far in the ten sectors under consideration. Total restructured loans in April amounted to Ksh. 273.1 billion or 9.6 percent of the total banking sector loan book of Ksh. 2.8 trillion.

As at May 15, 2020, eighteen commercial banks and two microfinance banks had been granted approval to access Ksh. 29.08 billion freed from the reduction in CBK’s cash reserve ratio requirement in order to provide funding relief to borrowers.

The data shows that Ksh. 3.6 billion of the funds have been approved for the real estate industry, the second-highest after manufacturing, while the building and construction sector received Ksh. 143.9 million.

In the real estate industry, beneficiaries of the funds include property agents, residential and commercial property owners, and property developers.

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