Connect with us


Kenyan Banks set to benefit from country’s improving economy

Published on

Kenyan banks are set to benefit from an improving economy as their solid capital, backed by strong recurring earnings and modest loan growth, shield them from asset risks.

Moody’s Investors Services published this on Thursday, 18 July 2019.

Profitability at Kenyan banks is one of the highest regionally. The banks delivered an aggregate return on assets of 3.4 percent in 2018, supported by rising operational efficiency.

The country’s economy is set to grow at around 6 percent in 2019 and 2020, supported by a strong services sector and private consumption.

“We expect growth in private-sector deposits to outpace loan growth, rising by about ten percent a year,” said Christos Theofilou, VP-Senior Analyst at Moody’s.

“Deposit growth is driven by rising financial inclusion, growing household wealth and strong remittance inflows. Kenyan banks will maintain their strong liquidity buffers as liquidity improves overall in the system,” he added.

According to the rating agency, Non-performing loans (NPLs) will remain high, close to the 11.7 percent recorded at the end of 2018.

Despite strong economic growth last year, public-sector arrears, cash-flow difficulties and a credit squeeze in corporate and SME sectors have increased delinquencies.

NPLs are nearing their peak, however, given banks’ efforts to recover and remediate problem loans and improving liquidity for private-sector companies, Moody’s noted.



Money Stories

error: Copyrighted Content