Profits up by 15% for Kenya's banking sector

Dec 08, 2016

A new report highlights banks' resilience amid a challenging environment.

Kenya's banking sector recorded a 15 per cent growth in core earnings growth during the nine months ending September 2016, according to a report by Cytton Investments seen by Capital FM.

Despite the challenging economic environment, the banking sector benefited from the launch of new innovative products and channels, such as agency and mobile banking, which reduced operating expenses and improved efficiency.

Increased financial inclusion and the expanding middle class also contributed to the sector's growth.

However,
deposits only increased by 7.7 per cent, which is lower than the 5-year average of 14.9 per cent, while non-performing loans continued to increase.

"With the ratio of non-performing loans to total loans rising to 8.3 per cent in Q3 from 6.2 per cent at the end of last year, there emerges concerns around asset quality, and the risk assessment framework currently in use," the report states.

During the period, there was a slowdown in private sector lending at 5.3 per cent.ADNFCR-2976-ID-801829592-ADNFCR