NAIROBI, Kenya, Jun 27 – Kenyan banks’ assets have continued to rise despite challenges facing the sector.
Data submitted by Central Bank of Kenya puts the total assets of the sector at Sh4.1 trillion, up from Sh3.1 trillion as at December 2015.
“Despite the interest rates cap which has posed many problems for Kenyan banks, 70 percent of the estimated Sh5.98 trillion financial assets were from banks, exclusive of capital markets,” Central Bank of Kenya’s Deputy Governor, Sheila M’Mbijjiwe told a corporate briefing.
M’Mbijjiwe said the troubled sector continues to expand, supporting a sound and resilient sector. Currently, the sector boasts of having 42 operational banks of which majority are locally owned.
The deputy governor also billed the Kenyan sector as a top performer, vis-a-vis her regional counterparts.
“Kenya’s return on assets stands at 4 percent, which is higher than those of South Africa at 1.7 percent, Uganda at 2.4 percent and Tanzania at 1.7 percent among others.”
Its profitability also compares well as far as return on equity is concerned. As of December last year, return on equity stood at 25.9 per cent, while South Africa’s was22.2 per cent, Uganda’s 14.7 per cent and Tanzania’s 24.3 per cent.
Gross non-performing loans in the sector were also noted to have risen rapidly since October 2015, following the placement of three banks in receivership, Central Bank’s attempts of cleaning up the banking sector and tight credit oversight.
However, gross non-performing loans to gross loans deteriorated from 5.4 percent in September 2012 to 9.5 percent in March of 2017.
M’Mbijjiwe challenged the Kenyan banking sector to take caution against emerging issues surrounding the industry, which include domestic risks such as weak liquidity and corporate governance practices, interest rate capping law and banking industries vulnerability such as the presence of a bank in liquidation and two in receivership.