Kenyan banks have ushered in 2023 with a remarkable performance, as pre-tax profits for the first quarter climbed to KES 65.1 billion ($650 million), a 13.6% increase compared to the same period last year, according to recent data released by the Central Bank of Kenya (CBK).
The CBK attributes this growth to enhanced cost efficiency, which led to a KES 5.2 billion reduction in operating expenses and a KES 2.7 billion increase in quarterly income. As a result, total assets for the banking sector expanded by 2.7% to reach KES 6.772 trillion.
Notably, the sector’s gross loans surged by 4.8% to KES 3.852 trillion, driven by increased credit for working capital and loans to individual borrowers. The financial services, transport, communication, and manufacturing sectors saw the largest influx of newly disbursed credit facilities during the first quarter.
Despite the impressive profitability and asset growth, Kenyan banks experienced a decline in asset quality, with the ratio of non-performing loans (NPLs) to the sector’s total loan book rising to 14% from 13.3% in December. The 10.9% increase in Q1 gross NPLs offset the 4.8% growth in gross loans, suggesting that banks may need to boost their provisioning levels to comply with the stricter IFRS9 accounting standards.
Stanbic Bank, the first tier-one lender to disclose its Q1 financials, reported an 84% surge in net profit to KES 3.89 billion. The bank’s total operating income soared by 64.7% to KES 11.15 billion, driven primarily by non-interest funded income, which more than doubled to KES 5.74 billion. Amid ongoing volatility in the local currency, Stanbic Bank’s forex trading income also increased more than twofold to KES 4.26 billion.
Stanbic Bank Kenya and South Sudan CEO Joshua Oigara emphasized the bank’s commitment to executing its three-year medium-term strategy that began in 2021. “The outcomes demonstrate our ability to create shared value and sustainable returns for shareholders and multiple stakeholders,” Oigara stated.