Kenya’s banking sector recorded a combined pre-tax profit of KES 61.5bn (EUR 531mn) for the first half of the year, up 15.6% y/y, Business Daily reported, quoting data by the central bank. The sectors’ earnings gained speed in the second quarter following the peaceful outcome of the March 4 general election. The banking system’s Q2 pre-tax profit rose 17.7% to KES 33.2bn from KES 28.2bn in Q1. The profit growth was driven by increased lending by banks, which provided a total of KES 50bn in new loans in Q2, up from KES 40bn in Q1. The sector’s outstanding loan book stood at KES 1.45trln at end-June. The increased lending activity was accompanied by falling interest rates, with those on deposits falling faster than those on loans, resulting in widening of interest rate margins.
Deposits in Kenya’s banking sector grew to KES 1.86trln at end-June from KES 1.78trln three months earlier thanks to strong agency banking activity. The 19,649 licensed agents conducted 10.2 million transactions valued at KES 60.4bn in Q2.
A major concern for the banking sector is the continued increase of non-performing loans (NPLs), which grew 10% q/q to KES 77.3bn, suggesting that banks’ earnings may be affected by rising risk costs.
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