Listed banks profit up 9pc in last cap results

Listed banks net earnings rose 8.7 percent to Sh83.9 billion in the first three quarters of 2019 compared to Sh77 billion over the same period a year ago.

The gain was mainly as a result of fast-growing non-interest income, which jumped 17 percent to Sh108.08 billion compared to interest income that grew only two percent to Sh263.4 billion.

The improved performance by the sector might, however, fail to trickle down to shareholders as most lenders are expected to maintain dividend payouts within 2018 range.

“We will have to wait for full-year results to expect higher payouts since banks might not feel the effects of rate cap repealing until 2020,” said Patrick Mumu a research analyst at Genghis Capital.

Over the period the NBK acquired by KCB Group #ticker:KCB, reported the biggest jump in net earnings, which rose by 18.5 times to Sh407 million.

KCB, the biggest bank with a market share of 14.1 percent booked the largest net earnings at Sh19.16 billion followed by Equity’s Sh17.47 billion with Co-op Bank coming third with Sh10.88 billion.

Of the 11 listed lenders, Housing Finance was the only loss maker at Sh84 million.

Bad loans in the 11 banks rose 13.7 percent to Sh273 billion as at September 2019. The NBK posted the highest non-performing loans ratio at 69 percent. “Despite the removal of rate caps, high yields from government paper and poor asset quality are still likely to affect the lenders’ ability to grow their loan books,” said Mr Mumu.

The whole banking sector gross earnings rose by nine percent to Sh125.3 billion in the period to September compared to Sh115.2 billion over the same period last year.

Overall liquidity in the sector remained high at 50.9 percent as at the end of September, this is according to the Central Bank of Kenya’s monthly economic indicators report.

Governor Patrick Njoroge has asked bankers to adopt a sense of social responsibility in the pricing of loans following the rate cap removal to boost economic growth by increasing lending to small firms.

“We must satisfactorily respond to the question at the top of every Kenyan’s mind — what will be different this time?

“We must not fail Kenyans!” he said at the Kenya Bankers’ Association Sustainable Finance Initiative Catalyst Awards last month.