Bank profits surge to hit Sh187bn in nine months
The Central Bank of Kenya head office in Nairobi. Data from the Central Bank of Kenya (CBK) shows banks earned Sh187 billion in profit before tax during the nine-month period, which is Sh41.5 billion more than the Sh145.5 billion that they earned during a similar period last year.
Banks have recorded a 28.5 per cent increase in profit before tax for the nine months to September driven by significant growth in interest and non-funded income as well as the rollout of cost-cutting measures.
Data from the Central Bank of Kenya (CBK) shows banks earned Sh187 billion in profit before tax during the nine-month period, which is Sh41.5 billion more than the Sh145.5 billion that they earned during a similar period last year.
Lenders are announcing impressive financial performance during the period helped by a recovering economy that has pushed up demand for loans from the key sectors of the economy and boosted loan repayment.
Some lenders have cut their loan loss provisions as they adopt a positive outlook on the status of their disbursed loans, while the shift to digital banking channels has helped banks to cut costs boosting their cost-to-income ratios.
Equity Group has maintained its lead as the most profitable bank in the country after posting a 28 per cent growth in net profit for the period.
The lender has earned Sh34.4 billion profit after tax during the period up from Sh26.9 billion last year.
This was driven by a 26 per cent growth in interest income from Sh67 billion to Sh84.2 billion. Equity’s non-funded income grew faster at 31 per cent, which increased its contribution to total income to 41 per cent.
KCB Group, which is the second most profitable bank in the country, saw a 21.4 per cent growth in net profit after earning Sh30.6 billion net profit up from Sh25.2 billion last year.
The performance saw the lender approve an interim dividend of Sh1 per share amounting to Sh3.2 billion for its shareholders.
Co-operative Bank also reported a 47 per cent growth in net profit during the period, which hit Sh17 billion in the review period, up from Sh11.6 billion a year earlier.
Non-interest income
Non-interest income, including fees and commissions from loans and forex trades, increased 28.2 per cent to Sh20.1 billion.
Interest income meanwhile rose 10.5 per cent to Sh43.7 billion, partly due to a growth in lending.
“Through our digital channel strategy, the bank has successfully moved 94 per cent of all customer transactions to alternative delivery channels, a 24-hour contact centre, mobile banking, 550 ATMs, Internet banking, and a wide network of Co-op Kwa Jirani agents,” said Cooperative Bank CEO Gideon Muriuki.
The CBK data shows that year-on-year lending by banks during the period shot up 57.4 per cent in the mining and quarrying sector, 21.6 per cent in the transport and communications sector, 14.4 per cent in consumer durables, 17 per cent in agriculture, and 16.4 per cent in trade.
