Bank profits jump 18% in two months on higher lending


Capital markets

Bank profits jump 18% in two months on higher lending


The Central Bank of Kenya, Nairobi. FILE PHOTO | NMG

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Summary

  • Kenyan banks’ pre-tax profit jumped 18.8% in the first two months of the year on higher lending and reduced provisioning for bad debts.
  • Earnings point to even higher profits this year for the industry after record full-year profits through December.
  • Banks recorded 194.8 billion shillings in gross profit last year, compared to 112.8 billion shillings in 2020, thanks to reduced provisions for loan losses in addition to higher income from loans and transactions .

Kenyan banks’ pre-tax profit jumped 18.8% in the first two months of the year on higher lending and reduced provisioning for bad debts.

Data from the Central Bank of Kenya (CBK) shows pre-tax profit was Sh36.1 billion during the reporting period, compared to Sh30.4 billion during a similar period the last year.

Earnings point to even higher profits this year for the industry after record full-year profits through December.

Banks recorded 194.8 billion shillings in gross profit last year, compared to 112.8 billion shillings in 2020, thanks to reduced provisions for loan losses in addition to higher income from loans and transactions .

Profit growth in the two-month period came as banks continued to increase lending to government and the private sector as the economy recovered.

Credit to government increased by 27.5% or Sh383.6 billion to Sh1.780 billion in the 12 months to February from Sh1.390 billion in February 2021.

Private sector credit growth fell from 8.6% in December 2021 to 9.1% in February to reach 3.13 trillion shillings.

The CBK, in the Monetary Policy Committee on March 29, said strong credit growth was seen in sectors such as transport and communications (24.1%), manufacturing (7.6% ), trade (8.9%), durable consumer goods (14.0%) and business services. (11.6 percent).

“The number of loan applications and approvals remained high, reflecting improved demand with increased economic activity,” the regulator said.

The easing of restrictions and the deployment of Covid-19 vaccines last year triggered a gradual recovery, boosting lending.

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