National Banks’s non-performing loans make up more than 50 percent of the loan book, a factor likely to adversely affect the financial status of KCB Group. KCB intends to manage the non-performing loans by writing them off and increasing provisions for bad debt.
Also, NBK’s low level of capital will most likely reduce the capital adequacy ratio at KCB.
An analysis by Moody’s Investor Service predicts that the takeover will lead to a weaker financial position for KCB Group in the short term.
KCB’s plan to acquire the debt-laden National Bank of Kenya recently gained approval from its shareholders and the Central Bank of Kenya. The transaction is expected to be finalized by the end of the third quarter of 2019.