KCB Chases Defaulters while Writing Off and Selling Problematic Loans

To reduce its stock of non-performing loans (NPLs) by the end of the year, KCB has been writing off and selling some of its bad loans.

The lender anticipates that these actions will reduce its NPLs (loans that have not been serviced for more than three months) to performing loans ratio to between 15% and 17% in 2022.

The NPL ratio for KCB increased to 21% by June, exceeding the industry average of 15%, before falling lower to 18.2% in the three months ending in September. When compared to the same period in 2021, the NPL ratio was higher at 14.7%.

Lawrence Kimathi, chief financial officer at KCB, said the lender has rehabilitated some of its non-performing loans and is waiting for the regulatory six months to reclassify them as performing.

“Others (NPLs) we have been able to write off. We just make a decision that we have taken provision of these facilities, just write it off from our NPL,” said Mr Kimathi on Monday, adding they continued to pursue recovery.

“Just because you write off doesn’t mean you don’t pursue recovery.”

“Some we are selling off. Some banks would like to take over some of the facilities from us and we are happy to sell off”.

In the past, he identified roads, manufacturing, and hospitality as some of the sectors that have raised the bank’s non-performing loans.

KCB Kenya was the main offender in the first half’s rise in the NPL ratio, with all the other subsidiaries making progress.

In an effort to lower its stock of bad loans, KCB Kenya has recently pursued several of its biggest defaulters aggressively, including Mumias Sugar, Savannah Cement, and English Point.

The publicly traded KCB recorded an increase in net profit of 20.9% to Sh30.6 billion over the nine months that ended in September from Sh25.2 billion the previous year.

With the conclusion of the acquisition of TMB for a price of more over Sh15 billion announced by KCB on Monday, the bank now has a foothold in the sizable mineral-rich nation of central Africa.

As the regional struggle for banking dominance intensifies, KCB has joined Equity Bank in the race to finance Sh3.5 trillion worth of trade agreements in the DRC.