banks
banks

Kenya’s banking industry is expected to remain stable and resilient despite the negative effects of the COVID-19 pandemic, according to a new central bank report released on Friday.

The apex bank notes that the east African nation’s commercial banks have sufficient capital buffers to withstand the COVID-19 pandemic shock, supported by the mitigation measures put in place by the government and individual financial institutions.

“Other regulatory measures that have enabled the banking sector to be resilient include the Kenya Banking Sector Charter of 2019 which entrenches responsibility and discipline in the banking industry,” said the Central Bank in the report dubbed financial sector stability.

However, despite the resilience, the regulator warns that the intensity and duration of the pandemic, which remains uncertain, will in the long-term hurt the industry.

In the past months, the central bank says the COVID-19 pandemic eroded the banks’ assets quality gains made in 2019 as non-performing loans (NPLs) increased.

“The ratio of gross NPLs to gross loans deteriorated to 13.1 percent in June 2020 from 12 percent in 2019, reflecting worsening households’ livelihoods and business closures, staff lay-offs due to disruptions in supply chains, restrictions of movements and lockdowns,” notes the bank. Enditem

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