The banking sector in Kenya registered robust performance last year, despite two banks being put under receivership, this according to a recently released bank supervision report
The sector’s total assets grew by 9.2 percent from Sh3.2trilions in 2014 to Sh3.5trillion. This growth is attributed to increased customer deposits and loan intake by various sectors of the economy
The report shows that gross loans increased from Sh1.9 trillion in 2014 to Sh2.16 trillion, a staggering 11.5 percent increase.
Among sectors that received much credit from Kenyan banks include: household, trade, real estate and manufacturing
During this period, Kenyans also deposited in access of Sh0.2 trillions compared to previous financial year. The report attributes this growth on mobile banking which offers lower cost deposits
Even so, the pre- tax profit for the sector shrunk by 5.03 percent from Sh141.1 billion in 2014 to S134 billion. This decline in profitability is blamed on faster growth in expenses compared to the growth in income
While the banks income increased by 9.1 percent, its expenses increased by 16.3 percent-almost double. However, average liquidity ratio increased by almost a percentile from 37.7 in 2014 to 38.3 percent last year
According to the Central Bank of Kenya Governor Dr Patrick Njoroge, the impact of the adverse global developments on Kenya was minimal due to the diversification of its economy and a stable financial sector
As a result, the diversification of macroeconomic indicators remained relatively stable and supportive of the growth in 2015. He said 2016 will be a year of transition seizing on the lessons and challenges in 2015
Currently, the banking sector in Kenya is fighting integrity issues which saw three banks put under receivership in a span of 9 months
It is perhaps on this basis that CBK is clinging on transparency, stronger governance and effective business models as key pillars to sanitize the sector.
Even though the sector is boasting of the growth, Kenyans have nothing to smile about due to high lending rates that continue to intensify inflation in the country
The current base lending rate of 10.5 percent has seen banks increase their rates by 41 percent from a low of 17.96 percent in 2014 to the current average of 24 percent.