Kenya's KCB Group expects restructured loans to halve in Q2

NAIROBI: KCB Group, Kenya's top l ender by assets, expects the proportion of loans it restructured last year to fall by half in the second quarter, senior company executives said on Thursday.

Central banks in Kenya and other east African countries where KCB Group operates permitted lenders to provide relief to customers, such as loan restructuring and payment rescheduling, from mid-March 2020 after the first COVID-19 cases were reported in the region.

The bank, which also operates in Rwanda, Burundi, Tanzania, Uganda and South Sudan, said late on Wednesday while releasing its earning results, it had restructured 106.1 billion shillings ($967 million), or 19.6%, of its total loan book for 2020.

KCB Chief Executive Joshua Oigara told a virtual news conference on Thursday that of this amount, holders of about 30 billion shillings in loans had already resumed normal repayment schedules.

"Some sectors are back on foot and are running. For those ones, there is no moratorium required. They go back to the normal businesses," Chief Financial Officer Lawrence Kimathi said at the same conference.

"In my view ... today we are seeing 30% (of the restructured loans resuming normal operations) by the first quarter, it will improve into 50% in the second quarter," he added.

KCB recorded a 30% drop in 2020 pretax profit to 25.7 billion shillings, hurt by increased provisions for loan losses and the effects of the COVID-19 pandemic.

Oigara said the bank plans to double its lending to small and medium businesses this year from 50 billion shillings it lent last year.

The government said last year it would set up a credit guarantee scheme for small and medium-sized businesses hit by the coronavirus, whose capital will eventually rise to at least 100 billion shillings.

Oigara said KCB was one of seven banks pre-qualified to participate in the scheme.