The impact of non-performing loans on the performance of the Banking sector in Kenya

Abstract

This study was carried out with objective of finding out whether the commercial banks in Kenya have been impacted by the problem of non-performing loans in this time of global financial crises. The findings confirms that nonperforming loans do affect commercial banks in Kenya further analysis of individual commercial banks with more than Ksh 25 billion worth of asset indicated while the impacts are negative the magnitude of nonperforming loans to both interest income and profitability are not adverse for 7 of the 13 analyzed banks and that asset quality of the whole banking sector has been improving to settle at 7.17%. Unlike commercial banks in the America and Europe no bank in Kenya has made losses due to the negative impact of NPLs singled handed even in the first half of the year 2009