The Central Bank of Kenya(CBK) posted a net surplus of KSh 36.9 Billion in the financial year ended 30th June 2021. This is a decline compared to a net surplus of KSh 41.5 Billion in the 2019/20 financial year.
According to its Annual Report and Financial Statements for 2020/21, the CBK attributes this drop to an exceptional gain of KSh 7.4 Billion in respect of demonetization the previous financial year that saw the country change the face of its currency notes and coins.
The 2020/21 surplus has been included as part of the General Reserve Fund.
The directors recommended an exceptional transfer of operational surplus in the year to 30 June 2021 of KSh 5 Billion on 12 February 2021.
The directors further recommend a final transfer of operational surplus in the year to 30 June 2021 of KSh 5.5 Billion to the Consolidated Fund, compared to KSh 2.500 Billion in 2020.
CBK operating surplus drops due to lower rates offered on foreign deposits
During the financial year ended 30 June 2021, CBK’s operating surplus was KSh 11.7 Billion compared to KSh 17.1 Billion in 2020 due to lower rates offered on foreign deposit placements and the one-off gain on the demonetization of old currency that was realised in the prior year.
An unrealised foreign exchange gain of KSh 25.3 Billion was recorded during the year ended 30 June 2021 compared to KSh 24.5 Billion in 2020 due to the strengthening of the US Dollar.
The Bank also recorded a fair value loss on fixed income securities of KSh 6.3 Billion compared to KSh 8.5 Billion gain in 2020 as a result of a decline in market prices. The loss recorded during the year has been presented in other comprehensive income.
In addition, an actuarial gain on retirement benefit asset of KSh 676 Million compared to KSh 1.9 Billion in 2020 was also earned.
There was an overall revaluation increase of KSh 1.3 Billion on land and buildings recorded during the year in the consolidated statement of comprehensive income.
This valuation is performed every 3 years in line with the Bank’s Fixed assets management policy.
The Bank’s Balance Sheet size grew to KSh 1,449,056 Million compared to KSh 1,350,434 Million in 2020, mainly attributed to an increase in funds on-lent to the Government of Kenya from the International Monetary Fund(IMF) and net inflows from banking institutions.
Liabilities of CBK increased to KShs 1,232,562 Million compared to KSh 1,154,419 Million in 2020 mainly due to loans owed to the IMF.
According to the CBK Governor Dr Patrick Njoroge, the 2020/21 financial year began against a backdrop of the global coronavirus (COVID-19) pandemic and measures taken by authorities across the world to mitigate the adverse demand and supply-side effects of the pandemic.
Critical productive and social sectors of the economy particularly health and education were significantly affected.
The Governor observes that the Kenyan economy continues to recover from the effects of the pandemic, supported by policy measures implemented by the Government to mitigate the adverse economic and financial effects of the pandemic and gradual reopening of the economy and easing of COVID-19 restrictions.
Similarly, the pace of global economic recovery has continued to strengthen, largely supported by the relaxation of COVID-19 restrictions particularly in the major economies, and the ongoing deployment of vaccines.
“Looking ahead, CBK will roll out a new strategic plan to guide its activities in the next three years. At the core of the strategic plan is the maintenance of a low and stable inflation nested, on continued coordination of monetary and fiscal policies to sustain macroeconomic stability and revamp the economy in the post Covid-19 period,” said Dr Njoroge.