Banks listed on the Nairobi Securities Exchange made about Sh90billion net profits in the six months to June despite a strained economy where households and businesses are struggling under the weight of high inflation and low cash flows.
The performance by the nine lenders including Equity , KCB , Co-op Bank and Absa in the first-half surpassed the profits they reported over a similar period last year, by over Sh21 billion.
Fillings show that the banks grew their profits by an average of 34 percent, to hit Sh85.4 billion cumulative profits between January and June 2022, up from cumulative profits worth Sh63.86 billion that they reported in the first half of 2021.
The lenders attribute the growth in profits to automation of services as more customers accessed services on digital platforms.
An analysis of profits reported by individual banks shows that profits by tier one banks, which control the biggest share of the lending market, grew the most constituting 84 percent of the Sh21.5 billion growth.
NCBA profits recorded the biggest growth in percentage terms, goring by 66.9 percent from Sh4.7 billion in the first half of 2021 to Sh7.77 billion in the first half of 2022.
Cooperative Bank which in the first half of last year reported a profit of Sh7.4 billion grew its profits to Sh11.5 billion, a growth of 55.7 percent.
Equity Bank's profits grew by 36.1 percent from Sh17.9 billion in the first half of 2021 to Sh24.4 billion from January to June 2022. Equity’s Sh6.5 billion growth in profits was the biggest during the period, in absolute terms.
KCB Bank closed the list of tier one banks that contributed Sh18 billion profit growth out of the total growth of Sh21.5 billion, its profits growing by 28.4 percent to Sh19.5 billion.
Other listed banks that have reported growth on different scales include Absa Bank whose profits grew by Sh722 million to Sh6.3 billion in the first half of 2022 compared to a similar period in 2021, a 12.9 percent growth.
Stanbic Bank profits also grew by 36.9 percent from Sh3.5 billion to Sh4.8 billion, while Diamond Trust Bank (DTB) profits registered a 25.6 percent growth, to Sh3.96 billion.
The growing profits by banks are, however, being witnessed even as both citizens and businesses reel under economic deprivation caused by inflationary pressures due to disruptions in global supply chains and foreign exchange volatilities which have caused product prices in the country to hit the highest levels ever witnessed, businesses to suffer huge operation costs and purchase power for consumers to diminish.
This is evident in the growing number of Kenyans who are unable to service loans they have taken from banks, with the analysis of the first half of 2022 showing that non-performing loans (NPLs) for the nine banks grew by 25 percent (Sh80 billion) between June 2021 and June 2022.
KCB Bank was the worst hit with its NPLs having grown by 81 percent, from Sh95.7 billion in June 2021 to Sh173.4 billion by end of June 2022. NPLs represent the value of loans customers fail to pay back to lenders for at least 90 days after the due date and mostly reflect a situation where borrowers are struggling.
“The sectors that have pushed up the NPLs are construction - especially in infrastructure like roads - hospitality and manufacturing,” said KCB Group Chief Executive Paul Russo, as the lender released its 2022 half-year results.
The latest Central Bank of Kenya (CBK) data shows that banks’ defaulted loans rose to Sh514.4 billion in June, crossing the half a trillion shillings mark for the first time in history.
