Motor vehicles and residential houses topped the list of Stanbic Bank’s Sh263 million asset seizures last year from individuals and firms that struggled with loan repayments.
The value of seizures for assets financed under the vehicle and asset finance such as saloon vehicles, prime movers and trailers rose 21 per cent to Sh210 million from Sh174 million.
However, seized residential properties dropped from Sh120 million to Sh53 million as customers turned to restructurings of their mortgages.
“Assets foreclosed as at the end of the year comprise saloon vehicles, prime movers and trailers, which had been financed by the group under VAF and residential property financed under personal markets,” says the bank in the latest annual report.
“It is the group’s policy to dispose of foreclosed properties on the open market, at market value. The proceeds are used to reduce or repay the outstanding claim.”
Stanbic’s mortgage lending grew from Sh34.78 billion to Sh35.86 billion while the loan book of vehicle and asset financing fell for the second year running from Sh13.13 billion to Sh10.73 billion.
At Sh263 million, the total value of repossessed assets by the lender has dropped for the third year running from ShSh294 million in the previous year and Sh312.3 million in 2020.
Last year’s value of repossessed assets is the lowest since 2017 when it stood at Sh285.6 million and points to the increased win-win negotiations between the bank and distressed customers.
Loan restructurings have helped soften debt distress among customers, with those unable to restructure also opting for private treaties as opposed to auctions.
Under private treaties, distressed borrowers agree with banks to look for the best available price for their properties and sell to repay loans as opposed to relying on the auctioneer’s hammer.
Renegotiated loans, which are loans that were refinanced, rescheduled, or rolled over after customers’ requests, fell sharply from Sh40.27 billion in 2020 to Sh6.09 last year.
Vehicle and asset finance renegotiations fell from Sh3.79 billion to Sh682 million, coinciding with the end of the Covid-19 restructuring window which allowed customers to extend the repayment period at no additional cost.