GCR expects the combined 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 around 3% over the full year 2020, half that of 2019. This opinion balances, an assumption that the current restrictions in place in Kenya will last up to 12weeks.
Higher cost of funds, weaker franchises and smaller capital bases often mean that lending is extended down the risk curve, unless they have a strong and defendable niche. This typically leads to weaker asset quality, especially through the cycle. GCR also sees relatively higher concentration risks, in both the lending and deposit books.