Banking Sector in Kenya’s total assets increased by 4.2 % to KSh 7.052.4 trillion in June 2023, from KSh 6.77 trillion in March 2023.
According to data from the Central Bank of Kenya, the banking sector’s gross loans increased by 3.3% from KSh 3.85 trillion in March 2023, to KSh 3.98 trllion in June 2023. The increase in gross loans disbursed by the banking sector was largely witnessed in the Trade, Transport and Communication, Personal and Household, and Manufacturing sectors. The increase in gross loans was mainly due to increased loans granted to individual borrowers.
The Banking Sector’s Total deposits increased by 6.9% from KSh 4.82 trillion in March 2023, to KSh 5.16 trillion in June 2023.
The Industry’s asset quality, measured by gross non-performing loans to gross loans ratio deteriorated from 14.0% in March 2023, to 14.5% in June 2023. This was due to a 6.5% increase in gross NPLs compared to a 3.3% increase in gross loans.
The capital adequacy ratio increased from 18.4% in March 2023 to 18.6% in June 2023.
Quarterly profit before tax increased by KSh 25.9 billion from KSh65.1 billion in March 2023, to KSh 91.0 billion in June 2023. The increase in profitability was mainly attributable to a higher increase in quarterly income by KSh 117.4 billion compared to the increase in quarterly expenses by KSh 91.5 billion.
Return on Equity (ROE) for the Banking industry increased from 27% in March 2023, to 33% in June 2023. The increase in ROE was due to increased quarterly profit before tax.
Liquidity in the banking sector decreased marginally from 49.9% in March 2023, to 49.7% in June 2023. This was well above the minimum statutory ratio of 20%.
According to the CBK June 2023 Credit Officer Survey findings, perceived demand for credit in Q2 2023 remained unchanged in nine economic sectors. It, however, increased in Trade, and Personal and Household sectors.
Banks intend to deploy their additional liquidity towards lending to the private sector (35%), investing in Treasury Bills (19%), interbank lending (17%), investing in Treasury Bonds (15%), CBK liquidity management through repos (11%), and increase their cash holdings (4%).
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