Kenyan banks achieved a record Sh152.3 billion in pre-tax profits for 2018, marking a 12.3% rise from the Sh135.5 billion recorded in 2017, according to a Central Bank of Kenya (CBK) report. This growth outpaces the 13.8% increase seen in 2015-2016, the previous fastest period for the sector.
The CBK’s findings reveal banks have navigated interest rate controls introduced in 2017, which capped loan costs to curb exploitative lending practices. Despite two rate reductions in 2018—bringing the base lending rate to 9.5% in March and 9% in July—banks maintained profitability through expanded loan portfolios and diversified income streams.
Stanbic Bank Holdings led with a 45.5% surge in net earnings to Sh6.27 billion in 2018, driven by a 12% growth in its loan book and 14% increase in net interest income. The bank’s CEO, Charles Mudiwa, acknowledged the challenges posed by regulatory constraints but emphasized strategic adjustments to sustain growth.
The Kenya Bankers Association (KBA) cautioned that CBK’s aggregated data requires verification against individual bank results, which were pending at the time of reporting. Meanwhile, banks projected continued expansion in 2019, citing stable macroeconomic conditions and heightened credit demand from households and businesses.
Over the decade, combined pre-tax profits more than doubled, rising from Sh73.7 billion in 2010. By year-end 2018, total deposits reached Sh3.33 trillion, while gross loans totaled Sh2.57 trillion. However, non-performing loans surpassed Sh308.8 billion, reflecting ongoing credit risk challenges.
International rankings highlighted Kenya’s top lenders, with Equity Bank, KCB, and Co-operative Bank among the world’s 20 most profitable institutions by return on assets (RoA). Equity Bank led with a 5.3% RoA, followed by KCB at 4.5% and Co-operative Bank at 4.24%.
