The banking sector has recorded varying degrees of profitability growth amid challenging macroeconomic conditions characterised by high inflation and foreign currency shortages.
This is according to published half year performance statements by three of the eight commercial banks operating in the country.
FDH Bank has posted a 116 percent surge in profit after tax to K60.279 billion from K27.936 billion in the same period last year.
The bank’s impressive performance was driven by a 92 percent increase in net interest income, supported by a 62 percent year-on-year growth in its loan book and increased holdings of other interest-bearing assets.
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“The bank’s total assets expanded by 54 percent compared to June 2024, primarily due to growth in the loan portfolio and government securities investments. Customer deposits rose by 43 percent despite the bank’s strategic decision to reduce term deposits to manage interest expenses,” a financial statement for the half year period published by the bank shows.
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Standard Bank also reported solid growth with profit after tax rising by 14 percent to K48.4 billion.
The bank achieved a 37 percent increase in total revenue, with net interest income growing by 44 percent supported by a 34 percent expansion in loans and advances to customers and a 65 percent increase in financial investments.
However, Standard Bank faced challenges with credit impairments surging by 166 percent compared to the previous year, reflecting both portfolio growth and an increase in credit downgrades.
“The macroeconomic environment contributed to higher forward-looking impairments on financial investments and customer loans.
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“Operating costs jumped 43 percent year-on-year, primarily due to inflation averaging 28.95 percent during the period, pushing the cost-to-income ratio from 37 percent to 39 percent,” the statement reads.
Centenary Bank demonstrated the strongest profitability growth among the three lenders, with profit before tax skyrocketing by 149 percent to K3.6 billion from K1.4 billion in December 2024.
The bank’s total assets grew impressively by 57 percent to K219.6 billion compared to June 2024, while client deposits expanded by 38 percent to K136 billion.
However, the bank’s net loan portfolio declined by 0.44 percent due to increased provisions and write-offs from a poor-quality legacy loan portfolio.
