The Central Bank of Kenya’s decision to raise the minimum core capital requirement for banks to KSh 10 billion will drive further consolidation in the sector, according to Joshua Oigara, the CEO of Stanbic Bank.
- •Oigara believes this policy decision will help create stronger banks capable of financing larger projects and expanding their footprint across Africa.
- •This move, which was proposed by the Treasury in June, aims to bolster the resilience of banks and anchor the country’s financial sector.
- •The National Assembly’s Finance and Planning Committee has proposed extending the period for banks to meet this requirement from three to eight years, giving banks more time to adjust.
Stanbic Bank’s profits rose to KSh 13.7 billion in 2024, up from KSh 12.2 billion in 2023, driven primarily by a drop in credit impairments. The final dividend of KSh 18.90 brings the total dividend for 2024 to KSh 20.74, marking a 35% increase from the KSh 15.35 issued in 2023.
Speaking on the Trading Bell Show with Maina Chege, Oigara remains optimistic on 2025’s economic outlook, predicting a rebound in credit growth:
“We expect to see credit growth rebound to around 10%, with our own loan book targeting a 14-16% increase despite last year’s 12% decline. Key sectors that were impacted last year, such as housing, exports, manufacturing, and trade, are likely to recover, while agriculture, tourism, education, and healthcare, which performed well in 2023, will continue to be strong growth areas.”
Oigara believes the recent Central Bank Rate (CBR) cut to 10.75% is a step in the right direction. However, he noted the lag effect of central bank adjustments on lending rates, which is usually 30 to 45 days.
