Loan write-offs by Sidian Bank hit Sh1.58 billion in the year ended December 2025, a significant increase compared to the previous year, after years of pursuing recovery and settlement by customers.
The write-off marked a sharp jump from just Sh22.33 million in 2024, ranking Sidian among the largest single-year loan losses in the industry. This came in the year when Sidian’s net profit rose six times to Sh1.72 billion from Sh287.35 million in 2024.
A loan write-off is the process by which a lender formally acknowledges that an advance is unlikely to be repaid and removes it from its balance sheet as an asset, even though borrowers remain liable to pay.
Sidian says in the latest disclosures that it has a policy to write off loans when it has exhausted all recovery efforts, even when they are still ‘subject to enforcement activity.’
‘The group writes off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded there is no reasonable expectation of recovery,’ said the mid-tier bank.
The lender’s non-performing loans (NPL) ratio remained high at 26 percent in 2025 against the industry’s 15.4 percent. The latest NPL ratio moderated from 27.2 percent in the previous year but remained more than twice the 11.7 percent in 2022.
Sidian said it deems loans as unrecoverable when there is no reasonable expectation of repayment, including cases where enforcement efforts have ceased or where recovery through collateral, such as foreclosure, is unlikely to yield full value.
‘The group may write off financial assets that are still subject to enforcement activity. The group still seeks to recover amounts it is legally owed in full, but which have been partially written off due to no reasonable expectation of recovering in full,’ said the lender. The write-off came in the year Sidian increased its provisioning for NPLs, which rose 87.6 percent to Sh2.44 billion from Sh1.3 billion.
The higher provisioning bucked the trend in the banking sector, where many players were reducing the provisions.
Sidian’s gross loans grew from Sh28.1 billion in 2024 to Sh31.54 billion last year, with most of it being short-term.
The lender’s loans maturing within a year nearly doubled to Sh15.5 billion from Sh8.1 billion as those with a maturity of between one and five years fell to Sh12.98 billion from Sh18.6 billion.
Those with maturity of over five years rose to Sh3.05 billion from Sh1.33 billion. The write-offs came in the year when the aggregate amount of NPLs edged up to Sh8.23 billion from Sh7.71 billion, while provisions for loan losses hit Sh3.59 billion from Sh3.05 billion.
Sidian said it closed the year with net non-performing loans of Sh4.64 billion compared with Sh4.65 billion in the previous year, against which it held various assets as collateral, including mortgages, motor vehicles, land and building, chattels, and share certificates.
Sidian says it sometimes modifies the terms of loans provided to customers due to commercial renegotiations, or for distressed loans, with a view to maximising recovery. This may involve longer repayment tenors, payment breaks, or partial write-downs.
However, the lender explains that it opted for restructuring because of indications of continued repayments.
‘These policies are kept under continuous review. Restructuring is most commonly applied to term loans,’ said the lender.
Sidian says its weighted average interest rate on loans and advances was 17.2 percent last year from 18.9 percent in 2024, with the easing reflecting the drop in the Central Bank Rate.