As we approach the close of the first quarter of the year, when most corporate institutions release their annual financial results, signals from the banking sector look good so far, at least according to the year ending December 2018 results which are already out. So far, some top banks have announced annual profits rather than losses all the way. This is amid the banking institutions efforts in pushing for the repeal of the interest rate cap that has been in effect since August 2016. We’ll have a look at some of these results briefly in this write up.

Kenya Commercial Bank (KCB) still holds the top position in profitability, having net earnings of Shs. 24 billion last year posting a 21.8% increase from the previous year’s earnings. Equity Bank came in a distant second having improved its net profit by 5% to a tune of Shs. 19.8 billion during the same period. Most of the latter’s interest comes from increased lending to government that has been resultant of the interest cap on loans. Equity’s loan book is now almost halfly owed by the government.

Equity’s CEO Mr. James Mwangi recently stated in a briefing that they are adopting innovative methods as a strategy to push lending to the private sector with a target of 10 to 15 percent growth by end of this year. Since good results for any companies comes as good news to the shareholders, the situation here is no different. The Cooperative Bank group recently increased their dividend payout by 25% due to their full year net profit growth of 11.6% to Shs. 12.7 billion, coming in third in the profit ranks in the lenders bracket. They too recorded an increase in government securities investments compared to individual customer loans.

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