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Homes, trucks top Stanbic’s Sh294m asset seizure

Friday May 7th 2021

A branch of Stanbic Bank on Kimathi Street in Nairobi. FILE PHOTO | NMG

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BY PATRICK ALUSHULA
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Summary

  • The total value of assets repossessed in the fiscal year ended December decreased from Sh312.3 million in the previous period as loan restructuring eased the mounting debt crisis in the coronavirus environment.
  • The value of the confiscated residential properties more than doubled from Sh 50 million to Sh 120 million in the December fiscal year, which shows that more customers have had difficulty servicing their mortgages.

Homes, sedans, prime movers and trucks topped the list of Sh 294 million asset seizures by individuals and businesses struggling to repay loans following the economic fallout from Covid-19.

The total value of assets repossessed in the fiscal year ended December decreased from Sh312.3 million in the previous period as loan restructuring eased the mounting debt crisis in the coronavirus environment.

The value of the confiscated residential properties more than doubled from Sh 50 million to Sh 120 million in the December fiscal year, which shows that more customers have had difficulty servicing their mortgages.

However, the value of asset seizures financed under Vehicle and Property Finance (VAF) decreased by a third to Sh174 million, bringing the total number of redemptions to the lowest level in three years when customers 40, Sh 27 billion loan restructuring applied for.

“The foreclosed assets at year-end include sedans, prime movers and trailers that were funded by the group through VAF and residential property-funded private markets,” the bank said.

“It is the group’s policy to sell foreclosed properties on the open market at market value. The proceeds will be used to reduce or repay the outstanding claim. “

Loan restructuring helped mitigate the debt crisis that worsened last year as companies cut salaries and laid off workers in response to sharp falls in sales.

The value of assets repossessed last year was the lowest since 2017 at Sh 285.6 million, indicating the impact of borrowers’ rush to apply for loan restructuring mainly in the form of longer repayment periods.

Renegotiated loans, which are debts that have been refinanced, rescheduled, or renewed at the customer’s request, rose 7.4 times to Sh 40.27 billion last year.

The restructured loans represent one-fifth of the Sh196.3 billion net loan book held by Stanbic late last year.

“The renegotiations resulted in the continuation of the original financial asset with no gain or loss recorded as a result of the restructuring,” the bank noted.

Stanbic’s restructured loans were part of the Sh 1.7 trillion, or 57 percent, of the banking sector’s loan book that followed a path similar to distressed customers trying to escape auctions.

During the year, Stanbic’s mortgage lending increased 36 percent to Sh34.78 billion, showing that despite the economic hardship of Covid-19, more customers were buying real estate.

House prices were discounted last year due to lower demand, which gave wealthy savers the opportunity to buy houses cheaply.

However, the loan book for vehicle and asset finance recorded a decline of 13.3 percent to Sh 13.13 billion.

Charles Mudiwa, CEO of Stanbic Bank Kenya, told Business Daily in an interview in March that customers had resumed payments for Sh32 billion, or 80 percent of the restricted loans, indicating an improved financial situation.

The lender reported an 18.6 percent decline in net income to Sh5.19 billion for the fiscal year ended December.