Diamond Trust Lags Kenyan Banking Stocks After Rise in Bad Debt

 Diamond Trust Bank Kenya Ltd. is Nairobi’s worst-performing banking stock year-to-date, with sentiment clouded by rising bad debts as many of its peers post signs of recovery from the ravages of the pandemic.

Asset quality is a concern for the lender, after bad debt provisions increased 24% in the first six months of the year, even as Kenyan peers cut the amount set aside to cover non-performing loans, according to Churchill Ogutu, head of research at Nairobi-based Genghis Capital.

“Provisioning will be elevated compared to peers which could eat into their profitability,” Ogutu said by phone. The outlook for Diamond Trust should improve if there is a rebound in the tourism, trade and real estate sectors, which account for most of its lending, he said.