Nairobi, June 10 -- The ratio of loan defaults to total lending in the banking sector shrunk to a two year low of 15.3 percent in May from 17.5 percent a year ago following write-offs of bad debt and a growth in credit as interest rates declined.

The Central Bank of Kenya (CBK) data indicates that the non-performing loans (NPLs) portfolio stood at Sh694.8 billion in May, down from Sh728.2 billion 12 months ago.

The decline in bad loans ratio follows disclosure of the huge write-offs made by banks last year with listed lenders writing off loans worth Sh75.06 billion last year.

Banks are required to write-off a bad loan if it is classified as non-performing for a year. Credit to the private sector grew by 9.3 percent in May being the fas...