An Equity Bank outlet. The bank earned Sh6.19 billion in the first quarter of the year. FILE PHOTO | NMG
Commercial banks’ profit before tax for the first four months of
2019 rose by 15 percent to Sh56.8 billion up from Sh49.4 billion on
increased lending, fresh data by the Central Bank of Kenya (CBK)
shows.
shows.
According to the regulator’s report, customer deposits shrunk slightly to Sh3.37 trillion from Sh3.4 trillion as at March.
Cumulative
loan book for the sector grew to Sh2.6 trillion, the highest point in
the country’s history, buoyed a relatively calm economy.
The
jump in earnings comes at a time when credit growth to the private
sector improved to 4.9 percent, the highest level since introduction of
the rate cap law that has dragged economic growth by stagnating cash
lent to businesses at below four percent, thus falling short of the
recommended 12 percent.
Analysis of lenders’ financial statements as at the end of the first quarter put Equity Bank
at pole position as Kenya’s most profitable lender ahead of KCB
.
The James Mwangi-led lender netted Sh6.19 billion in the quarter against KCB’s Sh5.77 billion.
Despite
the rosy results in the sector, non-performing loans (NPL) rose to an
all-time high of Sh345 billion in the period to March, putting the NPL
ratio at 13.5 percent, underlining struggles individuals and businesses
face in servicing their debts.
The effect of the tough
environment their customers are facing is in the short-term, manifested
in the rising gross NPLs and not necessarily in the top-line.
However,
in the long-run, if the current situation persists, we could see
declines in the bank’s revenue,” said Harrison Gitau, head of research
at stockbrokerage company Apex Africa in an earlier statement.
The
banking sector liquidity ratio stood at 51 percent at the end of April,
which is the highest level since May 2017. It stood at 49.1 percent at
the beginning of the year.
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