Kenya’s banking sector recorded improved performance in the first quarter ended March 31, with deposits in commercial banks rising to 25 billion U.S. dollars from 23.9 billion dollars in the previous quarter ending December 2014.
The Central Bank of Kenya (CBK) attributed the rise to branch expansion, remittances and increased use of alternative delivery channels of banking services such as agency banking.
“The number of bank deposit accounts increased from 28.4 million in December 2014 to 29.7 million in March, representing a growth of 1.3 million accounts,” CBK said in a report issued in Nairobi on Wednesday.
The report indicates that non-performing loans (NPLs) among banks rose from 1.1 billion dollars as at December last year to 1. 2 billion dollars in March.
The apex bank attributed the increase in NPLs to high lending rates and challenges experienced in the business environment. The bank said it will continue to deploy enhanced credit appraisal standards to mitigate credit risk.
On Agency Banking, the CBK said there were 16 commercial banks that had contracted 34,381 active agents which had facilitated over 149.4 million transactions valued at 8.52 billion dollars.
“Since the rollout of the agency banking model in May 2010, commercial banks have continued to contract varied retail entities to offer basic banking services,” the CBK said.
The contracted entities include security companies, courier services, pharmacies, supermarkets and post offices who act as third party agents to provide cash-in-cash-out transactions and other services in compliance with the laid down guidelines.
During the period under review, the banking sector’s aggregate balance sheet grew by 3.4 percent to 35 billion dollars as of March. Enditem