More Kenyans Default On Loans As Living Crisis Bites

Loan defaults rose for the fifth straight month in May, reaching a record Sh483 billion, owing to a pressured economy that has made it more difficult for people and businesses to service their loans.

Non-performing loans (NPLs) have been on the rise since December last year, when they declined to Sh426 billion from Sh436 billion in November, marking the second consecutive monthly drop in loan defaults. 

Since then, the bad loan book has risen to Sh483.8 billion in May, indicating harder economic conditions for borrowers in key sectors of the economy in the face of high inflation.

The difficult economy, on the other hand, has prompted more households and businesses to seek fresh bank loans for personal and business purposes. 

Banks lent Sh361 billion between May of last year and May of this year, bringing the total gross loans to the private sector to Sh3.44 trillion. 

This compares to the Sh181 billion issued by lenders between May 2020 and May last year, indicating a growing appetite for bank loans.