How Did Your Bank Perform In 2017?

Kenya’s 2017 macroeconomic environment was unfavorable majorly because of the tense electioneering period. Analysis from Trading Economics shows that the Kenyan economy advanced 4.4 percent year-on-year in the third quarter of 2017, slowing from a 5.6 percent expansion in the same quarter of 2016.

- Njeri Murigi

The Banking sector was hard hit by the unfavorable political environment and the interest rate cap law. The Industry gross non – performing loans and advances have been on steady rise from KSh 81bn in 2013 to the current KSh 263bn in 2017 this represents an overall increase of 225% for over the last five years. Banks are yet to find a more appropriate way to reduce Nonperforming loans. Some like Equity Bank have reduced their NPLs by using quality assets to give loans. Nonperforming loans were majorly contributed to by the fact that most Government institutions were not paying their suppliers who intunr did not have money to pay back the bank. Some of the assets held as collaterals were destroyed in the violence experienced in some parts of the country in 2017.

NIC Bank registered the highest rate of growth in total assets at 19.14%, followed by SBM Bank which increased its total assets by 18.61% and Credit Bank with 18.55% in growth.

Loans and Advances to Customers have increased by 4% from KSh 2.17tn in 2016 to KSh 2.26tn in 2017. This is a considerable improvement from the reduction of 3% that was recorded in 2016. Mobile Banking has increased loans been borrowed by Kenyans. This is because no collateral is required. The capping of interest enabled big corporate take larger sizes of loans to expand their businesses.

Total Assets for the industry have increased by 8.6% from KSh 3.67tn in 2016 to KSh 3.99tn in 2017.

Investments in Kenyan Government Securities have increased by 16.9% from KSh 857bn in 2016 to KSh 1tn in 2017. This is attributed to the banks’ reducing their lending to retail and corporate customers in favour of what they deem to be a safer investment in government securities.

Total Income for the industry declined 3.4% from KSh 502bn in 2016 to KSh 485bn in 2017. These are among the direct impacts of the capping of interest rates.