StanChart restructures 6.4pc loans – Business Daily

Standard Chartered #ticker:SCBK (StanChart) has restructured Sh8 billion of loans, equivalent to about 6.47 percent of its net loans at the end of last year, as the lender seeks to cushion customers who have been hit by the coronavirus crisis.

StanChart also announced repayment breaks of up to three months on all loans as customers hit by cash flow hitches seek flexible terms

The lender is the second after Absa Kenya #ticker:ABSA to disclose the impact of the health crisis on its loan book following a loosening of the loan repayment rules by the Central Bank of Kenya (CBK) last month.

The relief, which is being determined on a case-by-case basis, also includes a 12-month extension on personal loans and mortgage as well as extended credit card repayment period of between a six months and year.

The extensions reduce monthly instalment repayments.

World Bank expects Kenya’s economic growth will slow down to 1.5 percent this year, and contract 1 percent in the worst-case scenario as the virus saps demand from trading partners like Europe, as well as disrupt supply chains and domestic production.

This has led to layoffs, reduced cash flow for businesses and forced unpaid leaves, which have set the stage for loan defaults.

“As a bank, we believe we have two priorities during this pandemic, protecting our staff, and supporting our clients and communities,” Kariuki Ngari, CEO Kenya & East Africa, Standard Chartered Bank said.

“Access to funding and loan repayments was a key pressure point which is why we have restructured loan facilities worth over Sh8 billion to support the aforementioned sectors.”

StanChart reckon businesses operating in the tourism and hospitality sector, property market, trade and SMEs were the most hit by the virus.

The bank did not comment on the potential impact of the loan restructuring on its earnings this year. Its net profit increased 1.7 percent from Sh8.1 billion in 2018 to Sh8.2 billion in the year ended 2019.

CBK says loans worth Sh81.7 billion had been restructured since mid-March, a signalling that Absa and StanChart accounted for a fifth of credit whose terms have been reviewed.

Apart from allowing lenders to offer relief to distressed borrowers, the Central Bank has also cut lending rates and lowered the ratio of cash that commercial banks are required to hold.