Currently, GCR expects the impact of the COVID-19 inspired global and domestic slowdown in Q2’20, alongside the locust swarm in Q1’20, to bring down economic growth to the region of +3% over the full year 2020, half that of 2019.
GCR believe the top tier banks will deal with the downturn comparatively well to lower tiers, due to good levels of business diversification, and the cost and funding structure advantages which translate into higher earning buffers and better asset quality.
Non-performing loans and credit losses will increase over the year, although we expect the Central Bank of Kenya’s softening of classification and provisioning to stop an earnings shock and extend the reserving needs into 2021.
Profit is expected to decline across the sector, but capital adequacy is generally robust.
GCR will periodically provide insights on key sectors/industries across different territories in which various rated entities are domiciled, encompassing changes in the operating environment, performance trends and its view of the impact of an evolution in market dynamics on the credit risk profiles of rated entities in selected industries.
Group Head of Ratings
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Related Criteria and Research
Criteria for the GCR Ratings Framework, May 2019
Criteria for Rating Insurance Companies, May 2019
GCR Ratings Scales, Symbols & Definitions, May 2019
GCR Country Risk Scores, January 2020
GCR Insurance Sector Risk Scores, January 2020
GCR Financial Institutions Sector Risk Scores, December 2019
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