Cooperative Bank of Kenya Ltd. (COOP), the East African nation’s fifth-largest lender by market value, fell for the first session in three on expectations of reduced earnings and increased provisions against bad debt.
The stock dropped as much as 4.2 percent to 11.50 before it pared losses to 2.1 percent at 11.55 as of 2:31 p.m. in Nairobi. Yesterday was a public holiday.
“The drop is due to expectations of reduced earnings on account of lower credit growth and increased provision for doubtful debt as the higher interest rates increase chances of default,” Eva Njuguna a research analyst at Nairobi-based Sterling Capital Ltd., said in a phone interview.
Commercial banks are expected to extend the loan repayment period, absorb additional costs and not raise interest rates again despite an increase in the benchmark rate, Richard Etemesi the Kenya Bankers Association chairman told reporters today in Nairobi. Kenyan lenders have raised their interest rates on borrowed funds to match the rise in the benchmark rate to 18 percent.
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