History Repeats

It is now acknowledged that commercial banks have put the ghost of bad debts behind them and have moved on to new clean lending books. However a lot of the decline in non-performing assets can be attributed to an increase in the overall loan book (not really a decline)

Also, the future may not be without a repeat if you fast forward two years from now when a fraction of the unsecured loans being hawked at anyone with a pay slip now will likely have gone bad. With the passage of the in duplum rule banks have to cut their losses and begin collection efforts as soon as they realise a loan is in trouble.

But the courts are clogged and it is difficult to collect from unsecured loans as there are no assets to recover and where the amounts being pursued are not worth the legal cost in money and time.

Other recent happenings

– Diamond Trust (Kenya) to participate in rights issue of Diamond Trust Tanzanian where it owns 33%
– Equity bank growth getting super heated?
Family Bank is Kenya’s newest bank
– Housing finance new product for first time homeowners
– Kenya Commercial Bank gets a new CEO
– Perennial loss maker Oriental bank (formerly Delphis) is on track for a profit this year following a restructuring deal at Miwani Sugar.

8 thoughts on “History Repeats

  1. MainaT

    Does any of the insurers offer loan payment protection? And if not, I wonder if some of thinks lending (sorry throwing cash) at pple have thought of offering it? Equity-don’t know abt overheating, but there is a worry about whether managemnt and its controls can keep up. Re Family Finance, funny thing is that they’ve also lost their CEO a couple of weeks after their becoming a bank…

  2. Mitzy

    There has been a sharp increase in adverts for loans, especially unsecured ones. Is in duplum in effect yet as per the recent announcement/directive?
    I wonder what the disagreement between the CEO & management at Family was all about, after the effort they put into getting the guy from Equity.

  3. mugi

    Is Equity Bank growing too fast? Not sure, hard to tell. I think their investment in a new IT system (though there were some murmurs about its cost and implementation) and hopefully re-alignment of management structures should keep the bank booming.

  4. pesa tu

    Equity ain’t overheating its just reaching the limits of its capital.The money lent by a bank is tied to its capital.i.e. more capital more lending.
    Equity is raising the extra capital in order to lend more.This is part of the reason why Barclays had a bonus and retained more earnings to finance its expansion.

    Do look at K-Rep it has Equity like growth percentages.

  5. mudskippah

    How about adding landlordlove.co.ke next to the firsthop link. It’s a silly companion site which you may or may not enjoy. Check it out 🙂

  6. bankelele

    MainaT: there’s insurance for death or disability of the applicant which is required for most unsecured loans. But no cover for default from business failure /job loss, as far as I know. Family Finance, did a strange thing letting CEO go, but he didn’t get along with other senior staff

    Mitzy: Actualy, the adverts for unsecured loans seem to have reduced. In duplum will also be bad for borrowes, as it force banks to get aggressive with bad borrowers, not time wasting with repayment plans

    mugi: What should be a concern at Equity is the high turnover of staff & managers

    pesa tu: Hope so, it is a local model story like safaricom and should stay strong. But you can’t have shareholders voting almost each year on capital issues (bonus, splits etc.) – no other company does that

    mudskippah: That’s the flip of the Housing Finance ad. But no love on this site

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