Stanbic Bank and KCB Group have recorded a growth in core earnings per share out of the eleven Kenyan listed banks.
Data from Cytonn Investments show that Stanbic Bank recorded 19.7 percent in Q3’2017 compared to 2.1 similar period last year with KCB Group 5.0 percent this year and16.1 percent last year.
According to Cytonn “The average decline in core earnings across the banking sector is at 8.2 percent, owing to the tough operating environment as a result of the interest rate caps and political uncertainty in the country that affected the business environment.”
Average deposit growth came in at 12.9 percent. However, despite the average deposits having grown, the interest expense paid on deposits recorded a negative growth of 1.0 percent 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.
Average loan growth has been recorded at 6.3 percent, however interest income has decreased by 6.1 percent, showing the effects of the rate caps.
Investment in government securities has grown by 15.2 percent outpacing loan growth of 6.3 percent, showing increased lending to the government by banks as they avoid the risky borrowers,.
Non-funded income has however grown by 10.4 percent, which included a Fee and Commissions growth of 14.6 percent.
“This shows that banks are charging more fee income to improve their total yield on loans above the rate cap maximum,” notes Cytonn.
Cytonn Investments will update their valuations following release of the Q3’2017 results, and shall be releasing the Cytonn Q3’2017 Banking Sector Report next week.