NCBA Group has acquired a yard for storing cars repossessed from loan defaulters, pointing to a rise in asset seizures in Kenya’s struggling economy.

The group, which was formed last year following the merger between CBA group and NIC group, says in latest annual report that the yard has helped it maintain the vehicles and sell them at a better price.

This represents a departure from the common practice by banks where repossessed vehicles are taken directly to auctioneers’ yards for public sale.

“This has seen a 15 percent increase in the selling price of repossessed vehicles and faster turnaround in their disposal as we are now able to conduct basic maintenance like regular cleaning of vehicles and ensuring proper tyre pressure to restore their value,” said the bank.

The lender says it has financed over 4,300 vehicles worth around Sh17 billion, with over 80 percent of them being for commercial use by small and medium-sized enterprises.

The mounting defaults are a reflection of the struggles that loan holders are undergoing in an economy that has witnessed a string of job losses and closure of small business in the face of Covid-19.

Cars are like perishable produce. Every day you keep them in a yard they become less valuable due to depreciation.

They should just bite the bullet and provide for loan loss. It will cost them more to maintain the vehicles.

MoKosh, a micro lending platform managed under a partnership between telecom firm MTN and NCBA Bank has grown to seven million users, according to Mr Anthony Ndegwa, the NCBA Bank chief executive officer.

Mr Ndegwa said the bank will put focus on developing its digital presence driven by micro lending under MoKash.
Other focus areas, he said, will include assisting small and medium enterprises to develop capacity as well as developing the bank’s asset financing, advisory financial services and use of technology for the provision of financial services.
MoKash, he said currently has at least seven million subscribers and contributes immensely to the bank’s balance sheet.

The merger makes NCBA Bank Uganda’s 15 largest financial institution with a total asset base of Shs550b and capital position of Shs84b. “As a combined entity, NCBA has a significant capital base and a strong liquidity profile,” he said.