Bank profits increased to 60bn in 4months on economic rebound.

Bank profits increased by more than a third in the first four months of the year, with lenders earning 59.8 billion shillings.

Statistics from the Central Bank of Kenya (CBK) show that at the end of April last year, banks were earning 45.3 billion shillings after being hit by the Covid-19 epidemic which had already begun to destroy the country as airlines, hospitality and flower shipping. extinguish. down.


NCBA Group Chief Economist Raphael Agung noted that while the economy is not fully recovering during the period under review, it is doing much better than in April last year when the country went bankrupt.

“Looking at April 2020 and 2021, in general there are two differences in terms of economic activity,” he said, and the country went through a crisis last year.

April 2020 was probably the darkest period in the country’s economy, with and in and out of small numbers in some counties when the government imposed a curfew.

Mr Agung said that even when the country started enforcing social fraud laws, the CBK immediately asked banks to give borrowers struggling with the Covid-19 crisis debt repayment vacation between six to 12 months.

In addition to the lack of revenue from interest and capital payments, banks also did not incur rehabilitation costs, which they would do under normal circumstances.

Since then CBK has suspended restructuring to allow banks to select defaulters, as the economy has now begun to recover.

Doubtful debts

Non-performing loans (NPLs), or loans that have not been repaid for at least three months, accounted for 14.2 percent as a percentage of total loans in April this year.

This is an increase of 13.1% compared to the same period in 2020.

The proportion of non-performing loans is still large compared to the pre-catastrophic period, it declined from 14.5% in March.

What banks did in pre-tax profits at the end of April this year was close to what it earned in the first six months of 2020.

The shareholders of the bank are also expected to benefit from this benefit and return on equity, or what the owners get for every shilling they invest in the company, from 6% to 7.22%.

Many banks are planning to pay dividends this year, with Equity Bank which has not shared profits for two years now.

The volatile market left banks sitting on the pile of money and deposits increasing from 11% to 4.2 trillion shillings.

Since the economy has not fully recovered, banks have been cautious about extending loans to businesses and private borrowers. Instead, they gave a loan to the government.

The seven largest banks increased their investment in government securities by 14.8% on average last year to 1.03 trillion shillings from 901.7 billion shillings last year.

Last year, total loans to the private sector increased to 3 trillion shillings from 2.7 trillion shillings in 2019.

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