Commercial Banks’ Profit Increases by 30.7 Percent as NSE Shares Drop

The Economic Survey 2019 released by the Kenya National Bureau of Statistics (KNBS) on April 25 has revealed that commercial banks recorded a 30.7 percent increase total interest earned whereas the capital markets registered a decline in traded shares.

The banks’ total interest rose from 368.2 billion shillings in 2017 to 379.6 billion shillings in 2018.

KNBS attributed the growth to interest from an investment in government securities investments.

The interest from an investment in government securities rose by 13.4 percent during the period under review.

The growth of interest income from loans and advances contracted by 1.7 percent in 2018. Insurance activities slowed down to 5.2 percent growth in 2018 from 6.5 percent in 2017.

This was evident in the slowdown in the growth of gross premium income from 13.6 percent in 2017 to 5.3 percent in 2018.

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The growth of interest income from loans and advances contracted by 1.7 percent in 2018. Insurance activities slowed down to 5.2 percent growth in 2018 from 6.5 percent in 2017.

This was evident in the slowdown in the growth of gross premium income from 13.6 percent in 2017 to 5.3 percent in 2018.

According to the data, the performance of the financial and insurance sector was stronger in 2018 compared to constrained growth in 2017 following the introduction capping of interest rates in 2016.

The growth realized in the period under review was mainly supported by considerable improvements in financial activities in spite of a deceleration in the growth of insurance activities.

The sector expanded by 5.6 percent in 2018 compared to 2.8 percent in 2017.

Read: Kenya’s Economy Grew By 6.3 Percent in 2018, But Where is the Growth?

During the review period, domestic credit rose by 4.6 percent in 2018 compared to 8.7 percent in 2017.

Growth of credit to the National Government was slower (13.6 percent) in 2018 compared to 27.5 percent in 2017.

Similarly, credit to the private sector expanded by 1.9 percent in 2018 compared to 4.1 percent growth in 2017.

Money supply rose by 10.1 percent in 2018 compared to 9.6 percent growth in 2017.

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Capital Markets

Meanwhile, the Nairobi Securities Exchange (NSE) 20-Share index declined from 3,712 points in 2017 to 2,801 points in 2018.

The total number of shares traded reduced to 6.3 billion in 2018 from 7.1 billion shillings in 2017.

The total value of shares traded increased from 172.0 billion shillings in 2017 to 176.0 billion in 2018.

The equities market capitalization reduced by 16.7 percent to 2,102 billion shillings in 2018.

On the other hand, the total bond turnover increased from 429 billion shillings in 2017 to 558 billion shillings in 2018.