Cash-Flush Kenyan Banks Lift Provisions to Brace for Dim Outlook
Kenya’s two biggest banks are probably over the worst as far as potential loan losses go, but may still struggle to boost revenue in the wake of the coronavirus pandemic, according to AIB-AXYS Africa.
Equity Group Holdings Plc increased first-half provisions eightfold, while KCB Group Plc’s rose almost four times from a year earlier, hurting earnings. The nation’s lenders are helping customers restructure their debt after the Covid-19 outbreak stalled economic output and shut schools.
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The lenders took an aggressive approach to provisions to avoid setting aside more funds during the rest of 2020, said Sarah Wanga, head of research at the Nairobi-based brokerage that was formed out of the merger of AIB Capital Ltd. and ApexAfrica Capital Ltd. Profit will continue to come under pressure due to the expected loan losses and a limit on transaction fees banks can charge, she said.
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