Kenya’s three largest retail banks recorded huge drops in profitability during the three months to March 31, against a backdrop of weakening interest income on loans, rising volumes of bad debt and slower growth in fees and commissions.
Despite rosy growth figures released to the public, KCB, Equity and Co-op Bank lost a combined Ksh1.12 billion ($11.2 million) of their net earnings in terms of real cash generated from trading activities over the three-months period.
LOWER PROFITS
A review of the lenders’ unaudited financial statements shows that the three banks, which are listed on the Nairobi Securities Exchange, made a combined Ksh1.02 billion ($10.2 million) in additional profit in the three months to March 31, much lower than the Ksh2.14 billion ($21.4 million) in the same period last year, a more than 50 per cent decline.
Equity Bank, which has operations in Tanzania, Uganda, Rwanda, South Sudan and the Democratic Republic of Congo, recorded the highest drop in net earnings, with its additional net profit made during the period declining significantly to Ksh285 million ($2.85 million) this year from Ksh1.03 billion ($10.3 million) last year.
It was followed by KCB Group, whose additional profit fell by 33 per cent to Ksh590 million ($5.9 million) from Ksh892 million ($8.92 million). Co-op Bank made Ksh150 million ($1.5 million) this year compared with Ksh220 million ($2.2 million) last year, accounting for a more than 30 per cent drop.