The economic impact of the coronavirus has led to Kenya’s seven largest banks restructuring loans worth Sh176 billion—equivalent to 6.2 percent of the industry’s total gross loan book of Sh2.8 trillion. The pandemic has damaged Kenyan borrowers’ ability to repay their loans, particularly within the tourism sector, which has felt considerable financial pain following the suspension of international flights into and out of the country starting mid-March.
“In general, the banking sector has started to feel the adverse impact of Covid-19 as a result of slowdown in most economic sectors,” the Central Bank of Kenya (CBK) relayed to the Senate Ad Hoc Committee on the COVID-19 Situation in Kenya. The regulator also said that requests for extensions to personal loans and the restructuring of other credit arrangements are likely to ramp up in the coming months if the pandemic continues to impose lockdowns. But the central bank has made clear that it will be more flexible with respect to loan-classification requirements and the provisioning for loans that were performing on March 2 and with repayment periods that were extended or were restructured due to the pandemic.
The Banking Association South Africa (BASA) has recently detailed the financial-relief measures being provided by its banking members, noting that from the period beginning March 16 and ending April 25, South African lenders administered cash-flow relief to its customers, including payment breaks, worth R7.74 billion (US$420 million). To small and medium enterprises, similar relief has been granted worth R7.29 billion. “Of the over 1,200,000 individuals who applied for some form of relief, over 852,000 have already received assistance,” the BASA stated, adding that more than 75,000 of the 90,000 commercial, small and medium enterprises that applied have also received assistance. These numbers are expected to rise significantly going forward as more relief is approved.
Nigeria’s banks recorded strong financial results on the whole during the first quarter, with most of the period preceding the onset of the coronavirus outbreak. Seven Nigerian banks recorded a combined profit after tax of N209.16 billion ($540 million) for the quarter, according to their unaudited financial results, including Zenith Bank, Guaranty Trust Bank (GTB), Access Bank, United Bank for Africa, FBN Holdings, Fidelity Bank and Union Bank of Nigeria. Zenith Bank led the way with profit after tax of N50.53 billion for the quarter, marginally higher than the N50.23 billion recorded in first-quarter 2019. The bank’s total assets also swelled by 12 percent from the previous quarter to close at N7.13 trillion at the end of March.
GTB, meanwhile, recorded N50.07 billion in profit after tax, compared with N49.30 billion posted a year earlier. “These are very difficult and uncertain times, not just for the financial services sector and the economy as a whole, but also for hundreds of millions of people around the world whose lives and livelihoods have been put at risk by the COVID-19 pandemic,” GTB’s CEO Segun Agbaje noted. “At GTBank, we know that the impact of this pandemic may sustain for months to come, but we remain positive that by staying nimble and continuing to build on the strength of our businesses, we are appropriately positioned to cope with emerging economic realities, as reflected in our first-quarter result.”
Moody’s recently affirmed the ratings and assessments of 11 banks in Saudi Arabia. For 10 of the banks, the ratings agency changed its outlook on the long-term deposit ratings from stable to negative and maintained the negative outlook for the remaining bank. The decision to affirm the banks’ ratings demonstrates Moody’s view that the current ratings continue to reflect the resilience in their financial performances underpinned by strong capital buffers, favourable funding profiles and ample liquidity buffers, it said. The move also swiftly followed Moody’s change in outlook from stable to negative on the Saudi government’s A1 rating at the start of May.
Lebanon’s banking crisis, which has left most depositors shut out of their savings and the Lebanese currency losing more than half of its value since October, has only worsened since the onset of the coronavirus pandemic. With the country facing its worst economic situation since the 1975-90 civil war, protesters have stepped up their attacks on numerous banks, with employees now fearing for their lives. Strict capital controls and further restrictions imposed since the coronavirus outbreak have led to attacks on banks being intensified, to the point that much of the police force has been drafted to guard bank entrances across the country.
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