Poor start for Kenyan lenders as profits decline
Thursday August 24 2017
Kenyan banks posted reduced earnings in the six months to June 30, blamed on interest rate caps and reduced economic activity in the run-up to the August 8 General Election.
Top banks that have released their results — KCB, Co-operative Bank, Barclays, CfC Stanbic and Housing Finance — all recorded a fall in profits.
At 74 per cent, the mortgage firm Housing Finance posted the largest percentage decline in profit while KCB recorded a marginal decline of 0.2 per cent.
READ: Winners, losers under Kenya’s rate caps regime
“The impact of interest rates capping and the unfavourable macroeconomic environment have resulted in a significant drop in interest-related income and an increase in interest-related expenses,” said HF Group managing director, Frank Ireri.
HF’s earnings per share also plunged, impacting shareholders’ wealth.
A review of interim financial statements show that Barclays Bank’s profit after tax for the six months to June 30 declined to Ksh3.52 billion ($35.2 million) from Ksh4.08 billion ($40.8 million) while that of CfC Stanbic Bank dropped to Ksh1.72 billion ($17.2 million) from Ksh1.94 billion ($19.4 million) in the same period last year.
READ: Kenya’s top banks coping with a tight credit market
Co-operative Bank’s earnings fell 10 per cent to Ksh6.6 billion ($66 million) from Ksh7.4 billion ($74 million) while KCB’s revenues fell to Ksh10.26 billion ($102.6 million) from Ksh10.28 billion ($102.8 million) in the same period last year.
HF Group’s profit fell 74 per cent to Ksh159 million ($1.59 million).
Other banks that are not listed such as Victoria Commercial Bank saw net profit plunge to Ksh 307.77 million ($3.07 million) from Ksh275.99 million ($2.75 million) while Sidian Bank posted a loss of Ksh122.79 million ($1.22 million) from a profit of Ksh158.2 million ($1.58 million).