NAIROBI (Xinhua) --
Kenya’s commercial banks expect more of their
clients to repay their loans on time, indicating growing
optimism in the recovery of East Africa’s largest economy
following a prolonged electioneering period, the Central Bank of
Kenya (CBK) said.
commercial banks expect a drop in the levels of non-performing
loans in the first quarter of 2018,” CBK said in its Credit
Survey update released on Thursday.
Bank managers told
CBK in the survey that they will intensify efforts to recover
loans following return of normality in business environment
which is expected to increase cash flow in the key sectors of
“This expected drop
in non-performing loans is attributed to the enhanced recovery
efforts to be implemented by most banks. The banks expect to
intensify their credit recovery efforts in nine of the eleven
economic sectors,” the CBK said.
It notes that bank
managers have indicated their intention to allocate more
resources on monitoring and recovery of loans as well as use of
external parties in the recovery process.
surveyed said they expect positive response from across most
Among the sectors is
tourism, where number of visitors grew by 9.8 percent, according
to Najib Balala, Kenya’s Cabinet Secretary for Tourism and
Managers also expect
return of the long rainy season will help revive fortunes in the
sector is largely rain-fed. Reduced rainfall or change in
patterns often results in drought and high food inflation.
Another area where
loan repayments will increase, bank managers said, is in the
construction sector because of expected payments from the
government for the works done.
recovery efforts in five sectors; manufacturing, trade,
transport, personal, household, real estate, and financial
services in line with the banks’ expectations of a conducive
business environment during the first quarter of 2018,” the CBK
institutions have projected the Kenya economy to grow by up to
5.8 percent in 2018 compared to 4.7 percent in 2017, driven by
recovery of business environment following an election year of
Kenya’s Cabinet Secretary for the National Treasury, estimates
growth to hit 6 percent while CBK Governor Patrick Njoroge said
growth is likely to reach 6.2 percent.
The CBK said this
positive outlook will result in better servicing of loans,
helping banks reduce their exposure to bad loans.