NAIROBI, Kenya, Apr 3 – Kenya’s listed banks recorded an average decline in core earnings per share of 0.8 percent compared to a 4.4 percent gain in 2016.
According to a Cytonn Investments report this was weighed down by the enactment of the Banking Act 2015, which placed regulations on banks’ loan and deposit pricing framework.
Only National Bank and Equity Group recorded a growth in core earnings per share, registering at 457 percent, and 14 percent growth in earnings, respectively.
HF Group recorded the biggest decline at 86.1 percent, on the back of a 24.3 percent decline in Net Interest Income.
Average deposit growth for the banks hit at 12.5 percent.
“Despite the average deposits having grown, the interest expense paid on deposits recorded a slower growth of 2.5pc on average, indicating that banks are growing deposits but opening less interest earning accounts and possibly transferring some existing interest earning accounts to transaction accounts,” the report states.
Average loan growth has been recorded at 6.1 percent, with interest income decreasing by 2.4 percent, showing the effects of the rate cap, while Investment in government securities grew by 22.2 percent, showing increased lending to the government by banks as they avoid the risky borrowers.
“The average Net Interest Margin in the banking sector currently stands at 8.4pc, and Non-funded income has grown by 9 percent, which included a Fee and Commissions growth of 13.3 percent. This shows that banks are charging more fee income to improve their income on loans above the rate cap maximum,” the report shows.