Standard Chartered Bank of Kenya (StanChart) and KCB Bank Kenya top the list of banks’ Sh78.2 billion loan exposure in government entities as of the end of June 2024.
The latest disclosures by the National Treasury show StanChart has the highest exposure, having loaned out Sh16.62 billion at the end of the financial year that ended in June, followed by KCB at Sh14.61 billion.
The two lenders account for 39.9 percent of the outstanding non-guaranteed loans to the State-owned enterprises. Other top lenders include Stanbic Bank Kenya, Absa Bank Kenya, NCBA, Co-operative Bank of Kenya, and Equity Bank of Kenya.
Treasury shows StanChart closed the period with two dollar-denominated loans of Sh14.17 billion and Sh2.46 billion to Kenya Power and Kenya Pipeline, respectively.
Non-guaranteed debts mean that they are not backed by the State, even though the Treasury still faces exposure because when such entities default, the government has to move in to save them due to their strategic importance to the economy.
Treasury data shows 64 percent or Sh50.4 billion of the Sh78.2 billion loans are dollar-denominated, exposing these State firms to foreign exchange losses due to swings in the local currency against the dollar.
KCB has outstanding loans with seven State firms, with the largest being Sh7.53 billion to the National Oil Corporation of Kenya (Nock) and Sh4.35 billion going to the National Cereals and Produce Board for the purchase of fertiliser.
The lender has three outstanding loans to Jomo Kenyatta University of Agriculture and Technology (JKUAT), amounting to Sh2.3 billion.
This is in addition to Sh187.97 million and Sh173 million issued to Agricultural Development Corporation and Kerio Valley Development Authority, respectively.
Stanbic Bank, Absa, and French Development Agency (AFD) have outstanding loans to State firms at Sh10.83 billion, Sh10.78 billion, and Sh10.4 billion, completing the list of top five lenders.
Kenya Ports Authority has two loans in Stanbic, which stood at Sh8.24 billion while the same lender also issued Sh2.59 billion to Nock.
Absa has loaned KenGen Sh10.36 billion and Sh422 million to the University of Nairobi while AFD has given Nock two loans worth Sh10.4 billion.
Other banks with outstanding loans to State entities include NCBA (Sh6.63 billion), Co-op Bank (Sh4.62 billion), Rand Merchant Bank (Sh2.27 billion), Equity Bank Kenya (Sh1 billion), Credit Bank (Sh271.5 million) and UBA Kenya (Sh66.57 million).
NCBA has Sh6.5 billion outstanding loans to Kenya Power and Sh102.7 million issued to Postal Corporation of Kenya.
Co-op Bank’s main outstanding loans are to Geothermal Development Company (Sh1.87 billion), New Kenya Creameries Co-operation (Sh1.58 billion), and South Nyanza Sugar Company (Sh649.7 million).
Rand Merchant Bank’s Sh2.26 billion dollar-denominated loan is to Kenya Power while Equity Bank Kenya’s Sh1 billion loan to State firms is mainly to Maseno University (Sh447.3 million), Kenyatta University (Sh289.4 million) and Sh265.95 million to Kenya Power.
