Tourists tour the Maasai Mara Game Reserve: The sector’s non-performing loans hit Sh7.8 billion in June 2019. FILE PHOTO | NMG
Gross non-performing loans in the tourism sector grew 11 percent
to Sh7.8 billion in the quarter to June 2019 from Sh7 billion, the
newly released quarterly economic review by the Central Bank of Kenya
(CBK) shows.
The double-digit growth in the sector’s
dud assets was the highest compared to the other 10 main sectors as
classified by the regulator.
Interestingly, the
sector’s output grew by an average of 10.35 percent in the first two
quarters of 2019 according to the Kenya National Bureau of Statistics
(KNBS) quarterly Gross Domestic Product (GDP).
Personal
(Household loans) contribution shot past the Sh50 billion mark for the
first time to hit Sh52.3 billion, representing a seven percent growth
from Sh48.7 billion as at March 2019.
Trade sector
remained the highest contributor of bad loans for the banking industry,
with the sector holding Sh89.4 billion in such debt on recording a two
percent growth in the period.
Agriculture, which contributes up to 34 percent of the country’s
total output saw its bad loans edge up marginally by two percent to
Sh15.1 billion, while transport registered a four percent growth to
Sh21.8 billion.
Over the three months, seven out of 10
sectors recorded an increase in bad loans, clearly painting a picture of
a hard-pressed economy.
Manufacturing (Sh55 billion),
building and construction (Sh24 billion) and financial services (Sh6.8
billion) were the only sectors to report a decline of two percent and
three percent for the latter two respectively.
Bad
loans have since risen to Sh346.4 billion by the end of November 2019,
growing by Sh10.5 billion compared to the Sh335.9 billion in June as
reported by the central bank.
On the flipside,
non-performing loans ratio fell marginally to 12.4 percent compared to
12.6 percent in June as a result of the total loan book growing faster
compared to dud assets.
On the outlook of the banking sector, the regulator projects a more stable future but remains gloomy on credit growth.
“Credit
risk is expected to remain elevated in the short to medium term as
shown by increasing trend levels of non-performing loans,” said the
report.
In reality, the global slowdown over Covid 19 virus could make the scenario worse.
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