Kenya: Banks bad loans up 32 per cent
Loans have increased by 22.4 per cent.Non-performing loans held by financial institutions in Kenya increased by a third in 2014, new figures show.
The Central Bank of Kenya (CBK) said the stock of bad loans increased to Sh107.1 billion (€1 billion), from Sh80.6 billion in the previous year - a 32.9 per cent increase, the Star reports.
As a consequence, the banking sector's returns on assets and equity declined in the year.
Interest on deposits and staff costs also exerted pressure on the industry's spending, as lenders mobilised cheap funds from depositors, while employee retention and new branches expanded the payrolls.
"The annualised return on assets declined to 3.4 per cent from 3.6 per cent over the same period. Similarly, return on equity decreased to 26.6 per cent from 28.8 per cent over the same period," the CBK said.
The institution also reported that the volume of loans has increased by
22.4 per cent, boosted by personal loans, trade financing, manufacturing, transport and communication and real estate sectors.
The banking sector's pre-tax profits grew to Sh140.9 billion from Sh124.3 billion in 2013, a 13.4 per cent increase, mainly due to interests on loans, fees and commissions and investments in government securities.