A number of banks in Kenya are racing against time to regain money they advanced to individuals in the form of personal or business loans.
This has seen a number of local banks repossess residential houses, vehicles and trucks from individuals who have been unable to service their loans promptly.
Stanbic Bank for instance has seized assets totaling Ksh 294 million from individuals and firms that were unable to repay their loans due to the vagaries of the Covid-19 pandemic.
More customers struggled to service their loans which saw the value of seized residential properties double up from Ksh 50 million to Sh120 million in the financial year ended December.
On the other hand, the figures for assets under vehicle and asset finance (VAF) reduced to Ksh 174 million. Indeed most customers applied for loan restructurings – which saved their assets falling under this category from repossession.
Stanbic Bank stated thus: “Assets foreclosed as at the end of the year comprise saloon vehicles, prime movers and trailers, which had been financed by the group under VAF and residential property financed personal markets.”
“It is the group’s policy to dispose of foreclosed properties on the open market, at market value. The proceeds are used to reduce or repay the outstanding claim.”
Meanwhile, renegotiated loans jumped 7.4 times to Sh40.27 billion in 2020.
“The renegotiations resulted in the continuation of the original financial asset, with no gain or loss recognised as a consequence of the restructuring,” noted the bank.
The bank noted that its mortgage lending grew by 36 percent to Sh34.78 billion, proof that more customers were buying property despite Covid-19 economic hardships.
One of the reasons is the fact that property prices were in 2020 discounted due to lower demand, offering an opportunity for rich savers to acquire houses cheaply.
The bank, however, told the media that it had noted an improved financial situation.