The National Bank of Kenya (NBK) got another chance to survive as the KCG Group offered it a Sh5 billion lifeline.
This new development was officially confirmed in a sponsored advertisement on December 31, 2019 by NBK’s board of directors.
NBK’s Company Secretary Joseph Kania indicated that the infusion of this capital has made it possible for the bank to adhere to capital adequacy guidelines, apart from augmenting its monetary reserves.
The National Bank of Kenya’s asset quality has taken a severe beating in recent times owing to its share of Non-Performing Loans (NPLs) to total loans valued at 68.8 per cent of the total in the nine months ending September 30, last year compared to 47 percent in December 2018.
The National Bank of Kenya exceeds the banking industry’s approved ratio of non-performing loans of 12.5 percent by five times. Staggering non-performing loans of Sh32 billion loan have been National Bank of Kenya’s’ bane.
This amounts to over half of the bank’s loans, indicating that they have not been serviced for over three months. However, with the latest infusion of Sh5 billion, the NBK has a chance to improve its financial health.
Paul Rosso, the new Managing Director of NBK, predicted that by June this year, they should have made a substantial recovery in their endeavour to regain nearly 80 per cent of the lender’s troublesome loans.
Last year, KCB Group Chief Executive Joshua Oigara disclosed that from 2020, they will start to recover the loans due to NBK.