Millions of borrowers in Kenya have until June 3 to resume loan repayments that were paused last March when the Central Bank moved to cushion customers from the impact of Covid-19.

According to the Central Bank of Kenya, loans amounting to KSh1.7 trillion were restructured between March last year and February, accounting for 57 per cent of the banking sector’s gross loans.

The provisioning for non-performing loans has seen lenders KCB, Cooperative Bank of Kenya as well as Absa Bank of Kenya report a dip in profit for the year 2020.

Read also: Coop Bank profit dips 24 per cent to Sh10.8bn on loan defaults

Following the resumption of repayments and some pay-offs, the outstanding restructured loans as at end February were approximately KSh600 billion, or 19 per cent of the total gross loans.

Over 95 per cent of the outstanding restructured loans are being repaid in accordance with the new terms, said CBK in a statement released March 23.

While releasing 2020 results where KCB posted 22.2 per cent slump in full year 2020 earnings to Ksh19.6 billion, the bank provided Ksh27.5 billion for bad loans from Ksh8.9 billion in 2019.

“The negative impact on the economy drastically reduced our ability to operate necessitating loan restructures,” said KCB Group CEO Joshua Oigara.

Its rival, Coop Bank, profit dipped 24 per cent to Sh10.8bn on loan defaults seeing the lender's provision for bad loans surge 219.5 per cent to Ksh8.1 billion.

Read also: KCB sees profit slump 22 per cent as pandemic bad loan provision hit Sh28 billion

Absa Bank of Kenya's allowance for bad loans also went up 8 per cent to 17.9 billion from 16.3 billion in 2019.

Nearly two million Kenyans lost their jobs as Covid-19 pandemic took toll on employment especially workers in tourism, transport, horticulture, communication and education sectors, effectively rendering people and businesses unable to service their loans.

Borrowers in Kenya were provided with various credit restructuring options including extension of the repayment period, a moratorium on the loan principal or interest and waivers on interest or fees, said CBK.

The financial relief measures have provided space to borrowers to ride through the pandemic, mitigate job losses and anchor their business models to the new normal.

Kenya's GDP contracted by 1.1 per cent in the third quarter 2020 from 5.8 per cent in the corresponding period in 2019.

The country's economic performance remained depressed due to the global crisis caused by the Covid-19 pandemic. An improvement was, however, observed in comparison to the second quarter 2020.

The quarterly uptick was primarily supported by growth in the agriculture sector that recorded 6.3 per cent surge compared to 5.0 per cent in 2019 and a 16.2 per cent upswing in the construction sector versus 6.6 per cent recorded in 2019.

Manufacturing, electricity and transportation sectors each recorded 3.2 per cent, 4.7 per cent and 9.9 per cent expansion respectively.