By JAMES ANYANZWA

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Listed banks in Kenya are declaring hefty dividends to shareholders after reaping big from the on-going turmoil in the forex market, recording double digit growth profit earnings during the year ending December 31, 2022.

The lenders have also benefitted from increased earnings from their heavy investment in Kenya’s government securities (treasury bills and bonds), which is increasing borrowing from the domestic market to ease its liquidity challenges.

A review of the audited financial statements for lenders that have made public their financial performance statements show that there has been at least 60 percent surge in forex trading income. This is an indication that the existing shortage of the US Dollar and the significant depreciation of the local currency against the greenback have had positive impact on bank finances.

KCB Group said this week its net earnings for the 12 months to December 31, 2022 grew by 19.5 percent to KSh40.8 billion ($310.49 million) helped by a 39.8 percent growth in non-funded income to KSh43.3 billion ($321.59 million) and a 11.5 percent rise in net interest income to KSh86.7 billion ($659.79 million)

Read: KCB's 2022 post-tax profit jumps to 19.5pc

Kenya Commercial Bank branch along Mama Ngina Street in Nairobi County, Kenya. PHOTO | DENNIS ONSONGO | NMG

Of the non-funded income earnings from forex exchange, trading jumped by 69 percent to KSh11.1 billion ($84.47 million) from KSh6.5 billion ($49.46 million).

Interest on government securities grew by 24 percent to KSh32.86 billion ($250.1 million) from KSh26.53 billion ($201.89 million) while interest on loans and advances grew by 14 percent to KSh84.17 billion ($640.53 million) from KSh73.97 billion ($562.91 million) during the period under review.

Attractive dividend yields

Analysts at Dyer and Blair Investment Bank (DIB) reckoned that Kenyan lenders are trading at discounted price-earning (P/E) multiples and extremely attractive dividend yields.

“We believe investors should look to buy now before the currency woes settle down and foreigners and institutional investors flock back,” according to the analysts through their clients’ report dated March 17,2023.

KCB board recommended a final dividend of KSh1 ($0.0076) per share putting the total dividend per share for the period at KSh2 ($0.015) compared to KSh3 ($0.023) in the previous year (2021), having already paid an interim dividend of KSh1 ($0.0076) per share.

Co-operative Bank’s net profit increased by 33 percent to KSh22 billion ($167.42 million) largely fuelled by a 32.7 percent   rise in non-funded income to KSh25.7 billion ($195.58 million) and a 10.9 percent growth in net interest income to KSh45.5 billion ($346.26 million).

Forex trading income surged by 65.6 percent   to KSh4.71 billion ($35.84 million) from KSh2.84 billion ($21.61 million) while fees and commissions on loans and advances grew by 38.7 percent to KSh7.5 billion ($57.08 million).

Its interest on government securities increased by 11 percent to KSh20.86 billion ($158.74 million) from KSh18.72 billion ($142.46 million) while interest on loans grew by a similar margin to KSh40.4 billion ($307.44 million) from KSh36.5 billion ($277.77 million).

Its board recommended a first and final dividend of KSh1.5 ($0.011) per share from KSh1($0.0076) per share in the previous year.

Read: Co-op Bank's net profit surges 33pc

Absa bank Kenya recorded a 34 percent growth in net profit to KSh14.6 billion ($111.11 million) mainly as a result of a 27.9 percent growth in net interest income to KSh32.3 billion ($245.8 million) and a 17.2 percent increase in non-funded income to KSh13.7 billion ($104.26 million)

The group’s non-funded income grew by   17.2 percent to KSh13.7 billion ($104.26 million), occasioned by a 60 percent   increase in net income from forex dealings to KSh6.64 billion ($50.53 million) from KSh4.16 billion ($31.66 million) and an 8.3 percent growth in other fees and commissions to Ksh4.8 billion ($36.53 million).

Its interest from government securities grew by 14 percent to KSh9.42 billion ($71.69 million) from KSh8.29 billion ($63.09 million) while interest on loans and advances grew by 33 percent to KSh30.68 billion ($233.47 million) from KSh23.09 billion ($175.71 million).

The board proposed a final dividend of KSh1.15($0.0088) per share placing the total dividend per share for the period at KSh1.35($0.010) from KSh1.1($0.0084) in 2021 having already paid an interim dividend of Ksh0.2 ($0.0015) per share.

Standard chartered Bank Kenya’s net earnings grew by 33 percent to KSh12.1 billion ($920.81 Million) mainly as a result of growth in interest and non-interest income and a 36.2 percent   decline in loan loss provisions to KSh1.3 billion ($9.89million).

Its total interest income grew by 14.3 percent   to KSh25.5 billion ($194.06 million) while non-funded income rose by 13.5 percent   to KSh11.8 billion ($89.8 million) owing to a 58.4 percent growth   in net income from forex dealings to KSh6 billion ($45.66 million).

The board recommended a final dividend of KSh16($0.12) per share placing the total dividend per share for the period at KSh22 ($0.17) compared to KSh19 ($0.14) in the previous year (2021), having already paid an interim dividend of KSh6($0.046) per share.

Dollar crisis

Kenya is grappling with the accelerating dollar crisis which appears to be spiralling out of control, with households and businesses bearing the brunt of the financial shock.

A trader at Muthurwa market in Kenya's capital Nairobi counting money after the day’s sales. The shilling has continued weakening against the dollar. PHOTO | NMG

The shortage of the US currency in the economy has severely hit commercial transactions leading to the proliferation of   parallel foreign exchange markets (black market) as commercial banks and forex bureaus cashed in on the scarce currency to hit the jackpot.

The rates are trading to a high of KSh145 in forex bureaus compared to Central Bank’s official rate of KSh130 per US Dollar.

Demand for forex has shot through the roof in recent months as importers seek more dollars to finance imports, owing to higher global prices of fuel, food, cooking oil, steel among other imports.

The Central Bank of Kenya (CBK) has been blamed for the dollar crisis, having introduced tough rules on the foreign exchange interbank market. But CBK Governor Patrick Njoroge has always downplayed the crisis.