Banks Grow Pre-Tax Profits By 73% To Ksh.195 Billion In 2021

 

By Kepha Muiruri For Citizen Digital

Banks have posted a 73 per cent growth in pre-tax profits through 12 months to December 2021 with the earnings rising to Ksh.194.8 billion from Ksh.112.8 billion in 2020.

This is according to new data from the Central Bank of Kenya (CBK) which lays down a marker on the turnaround of banking sector returns after the initial hit of the COVID-19 pandemic.

The rise in earnings is attributable to returning interest income after the resumption of lending by the sector and a trim to loan-loss provisioning costs in which funds are written back to banks profit & loss account.

A number of banks are thus expected to post a multiple growth in earnings from the turnaround with most lenders expected to announce their 2021 full year results this month.

Already, Stanbic Holdings has reported a 38.7 per cent growth in net profit for the year on higher interest income and lower credit impairments.

The remainder of bank results are widely expected to mimic those of Stanbic as banks on average mark similar gains.

Top banks are subsequently and widely expected to resume dividend payments with some being Equity having already skipped the ritual in the past two years.

“We expect the higher earnings to result in the resumption of dividend payouts,” noted analysts at Sterling Capital.

Regional acquisitions including those by KCB, Equity and I&M are also expected to boost the expected earnings.

Banking sector assets in the year grew by 11.1 per cent to Ksh.6 trillion from Ksh.5.4 trillion.

While lenders cut their exposure to non-performing loans (NPLs) as credit risks eased at the end of the year, the stock of gross NPLs to total loans was up marginal year over year at Ksh.426.8 billion from Ksh.424.1 billion.

Meanwhile, gross industry deposits closed the year at Ksh.4.4 trillion from a flat Ksh.4 trillion in December 2020.