, NAIROBI, Kenya, Aug 11 – Barclays Bank of Kenya has posted 19 percent rise in half year profit after tax to Sh3.7 billion from Sh3.1 billion.
Profit before tax for the first half of 2010 stood at S4.75 billion, marking a five percent growth from Sh4.5 billion in the corresponding period of 2009.
Interest income rose seven percent from Sh8.6 billion during the same period in 2009 to Sh9.2 billion, said Barclays Chief Executive Officer Adan Mohamed on Wednesday.
He told an investors briefing that total income for the bank was up 16 percent to Sh13.2 billion, because of effective margin management in a low interest rate environment.
“Income growth was boosted by earnings from new gross lending amounting Sh10 billion – primarily new loans to individuals and small businesses,” Mr Mohamed explained.
During the period, customer deposits grew by five percent to Sh130.5 billion as the bank’s total assets advanced to Sh173 billion from Sh170 billion in 2009.
He said that although the bank’s loans and advances declined from Sh98.3 billion in 2009 to Sh91.5 billion, it did not mean reduced lending but rather points to increased repayment of loans by customers.
Mr Mohamed told investors that he expects the difference between Central Bank of Kenya (CBK) and commercial lending rates to thin out in the near future, and even predicted that financial institutions may lower their lending rates to as low as five percent in the face of increased competition for loans.
“Competition will force the reduction on spreads over time and this is a fact as it has happened,” he said.
Commercial lenders have been coming under increased pressure to react to the CBK’s cuts to its benchmark interest rates. The Central Bank has so far made seven cuts to its CBR with the latest coming in July when it slashed it to as low as six percent.
The CBK’s intention is to drive commercial lenders to cut their lending rates in an effort of accelerating economic growth.
Mr Mohamed is also of the opinion that the introduction of credit reference bureaus would push banks to lower rates as they become aware of individual and business risk profiles.
“What is important in determining the spread is the risk profiles of the various proposals that banks have to deal with whether they are secured or unsecured products,” he said.