Kenya’s listed banks recorded a 13.8-percent decline in core Earnings Per Share (EPS) growth for the first six months of 2017, compared to 15.5 percent in a similar period last year, a report released on Monday shows.

The assessment by Nairobi-based investment firm Cytonn Investment noted that the poor performance of the banking sector was primarily on the back of an 8.1-percent decline in Net Interest Income (NII) following the capping of interest rates in 2016.

“The banking industry’s loan growth came in lower as private sector credit growth slowed to 2.1 percent in the first half of 2017, below the government’s set target of 18.3 percent, with banks adopting a more prudent credit risk assessment framework to ensure quality loan books,” said Cytonn’s 2017 Half year Banking Sector Report.

“Consequently, allocation to government securities by banks rose to 32.2 percent between January and June 2017, up from the 29.4 percent experienced in a similar period in 2016,” noted Cytonn.

Deposits for the banking sector grew at 14.4 percent during the first half of the year, a faster rate than loans, which grew by 9.3 percent. The sector has remained resilient by adopting a disciplined banking approach.

The firm noted that consolidation is set to gather pace as key issues such as increased loan loss provisioning and the regulated loan and deposit pricing framework prevail in this challenging operating environment.

“This will in turn transit the industry into one with fewer but stable banks, leading to a more efficient and stable banking sector,” says the report. Enditem

Source: Xinhua/


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