Stanbic Bank #ticker:CFC seized customers’ assets valued at Sh381.88 million last year over unpaid loans, a 33.7 percent rise from the previous year. The move underlines increasing debt distress by lenders as individuals and firms struggle with repayment.
The listed bank disclosed in its latest annual report that repossessions for the financial year ended December 2018 grew from Sh285.6 million the previous year with repossessed residential properties more than quadrupling.
Assets repossessed comprised saloon cars, prime movers and trailers, which had been financed by the bank under vehicle and asset finance (VAF). Also seized were residential and commercial property financed under personal markets.
The seized assets will now be auctioned to recover the sum as is the policy with many lenders.
“The proceeds are used to reduce or repay the outstanding claim. In general, the bank does not occupy repossessed properties for business use,” Stanbic says in the report.
The value of residential properties seized rose from Sh19.65 million to Sh86.97 million in 2018 while other class of assets rose from Sh265.9 million to Sh294.9 million.
During the year, mortgage lending grew 17 percent to Sh21.02 billion, showing that more customers were developing property. This accounted for 13.3 percent of Stanbic’s Sh157.85 billion gross loans and advances as at end of the year.
Newspapers have been replete with adverts of vehicles and other properties put up for auction by banks.
As is common practice, banks rely on collateral to mitigate credit risk. They also rely on a panel that undertakes valuation of property and other assets used as collateral.
The repossessions came in the year Stanbic posted a 45.5 percent jump in net profit to Sh6.27 billion, supported by growth in both interest and non-interest income.
Net interest income grew by 14 percent to Sh12.13 billion from Sh10.6 billion posted at the end of previous financial year.
The bank cut loan loss provisions by 37.2 percent to Sh1.73 billion during the year as the Bank continues to focus on proactive arrears management.