NAIROBI: Commercial banks made 114.2 billion shillings in pretax profits during the first nine months of this year. The profit represents a 9.3 percent increase on the 104.5 billion shillings that banks made in profit during a similar period last year.
The latest banking report by the central bank indicates that the profit was mainly driven by interest on advances, other income and interest on government securities. The banking sector’s gross loans and advances increased from 2.17 trillion shillings as at June this year to 2.32 trillion shillings, three months later.
This represented a growth of 6.9 percent. Interest on loans and advances is partly what helped commercial banks post 114.2 billion shillings in pretax profits during the first nine months of this year.
However, the value of gross non-performing loans increased by 0.7 percent from 123.9 billion shillings in June this year to 124.8 billion in September this year. Non-Performing Loans in the Financial Services and Energy and Water increased by 11.5% and 11.6% respectively while Tourism, Restaurant and Hotels sector recorded a decrease of 14.0%.
CBK says liquidity risk is expected to increase as some banks remain exposed to liquidity challenges evidenced by drop in liquidity level from 38.7 % in June to 37.4% in September 2015.
The size of total assets increased to 3.65 trillion shillings while gross loans rose to 2.32 trillion shillings as the deposit base hit 2.57 trillion shillings. The number of bank customer deposit and loan accounts stood at 33.29 million and 7 million respectively.
Going forward, the central Bank of Kenya projects that the banking sector will remain stable and maintain an upward growth trend in the current quarter. CBK says the credit and liquidity risks are expected to remain elevated to the end of the year 2015.
