This archive report was first published on 30 June 2019.
Commercial banks in Kenya have recorded a significant increase in profits, with the sector's profit before tax rising by 15% to Sh56.8 billion in the first quarter of 2019.
According to data from the Central Bank of Kenya (CBK), the increase in profits was driven by increased lending and a relatively calm economy, with the cumulative loan book for the sector growing to Sh2.6 trillion, the highest point in the country's history.
Customer deposits, however, shrunk slightly to Sh3.37 trillion from Sh3.4 trillion as at March, while non-performing loans (NPL) rose to an all-time high of Sh345 billion in the period to March, putting the NPL ratio at 13.5%.
Equity Bank emerged as the most profitable lender in the quarter, netting Sh6.19 billion, ahead of KCB, which earned Sh5.77 billion.
Despite the rosy results, analysts have warned that the current economic environment could lead to declines in bank revenue in the long run.
"If the current situation persists, we could see declines in the bank's revenue," said Harrison Gitau, head of research at stockbrokerage company Apex Africa.
The banking sector liquidity ratio stood at 51% at the end of April, the highest level since May 2017.
