CBK
Bank generous to shareholders despite looming liquidity challenge
Banks have stepped up dividend rewards to shareholders to lock in investors as share price collapse on exiting foreign investors. According to the Central Bank annual report, banks proposed dividends increased by Kes5.4 billion from Kes42 billion in December 2021 to Kes47.2 billion in December 2022. The higher payout helped boost the Return on Equity (RoE), which rose above pre-pandemic levels to 26.5 percent on higher returns to shareholders. Bank return on shareholders have rose from 22.3 percent in 2021 and 14.2 percent in 2020 when it collapsed on the effects of the Covid-19 pandemic, a period during which lenders restricted shareholders’ dividend to conserve cash for…
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StanChart quadruples returns from deposits with local banks
Standard Chartered Group saw a four fold increase in interest earning deposit accounts with local lenders, powering the bank’s 43 percent jump in net profit to Kes5.63 billion in the three months to March from Kes3.92 billion in the same period last year. Income from deposits with other banks grew to Kes1.12 billion from Kes296 million reported in March 2022. StanChart reported increase in the deposits and balances due from local institutions which stood at Kes1.76 billion in March 2023 compared to Kes9.6 million during the first quarter 2022. In Kenya, banks are having a challenge getting cash from other lenders due to a dysfunctional…
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Kenyan banking industry on edge as cash reserves decrease
While American banks started collapsing when the Federal Reserve started raising rates, Kenyan lenders have mostly remained stable since the Central Bank Rate (CBR) was hiked 250 basis points over the last one year, but cracks are beginning to show. Lenders liquidity position has dipped to 49.9 percent in the three months this year, from 50.8 percent at the end of December according to the Central Bank of Kenya (CBK) first quarter credit survey. CBK’s Banking Supervision report also shows that commercial banks hit record high borrowing of Kes147 billion from CBK, the lender of last resort to maintain liquidity requirements taking up about Kes40…
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Falling shilling pushes I&M to hold merger fees in dollars
I&M Bank want shareholders to approve conversion of their buyout kitty to US dollars to beat market volatility since merger and acquisition transactions are conducted in greenback. The lender told shareholders it needed approvals for setting aside not more than $75 million in a kitty created seven year ago to undertake an acquisition, a merger, enter into a joint venture agreement or set up a new (greenfield) ventures. Corporates and individuals are stocking up dollars to beat the depreciation of the Kenyan shilling that has dropped 28.4 percent over the last two years after the country’s debt became unstainable draining dollar reserves to make payments. The…
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Banks exposure to GoK debt cut to a decade low
Local Kenyan lenders are holding the smallest portion of state debt in almost ten years as banks dump government securities on rate hikes, heightened risk of default and the possibility of restructuring. Central bank data shows the portion of domestic debt held by banks stood at 45.64 percent in April down from 54.8 percent in June 2020. The last time banks held less than 50 percent of domestic debt was 49.4 percent in March 2014, and have been accumulating risk free state debt over the decade, (especially during the rate cap era) to a high of 57.8 percent in July 2015. Kenyan banks hold Kes2…
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Why transactions via QR Codes are set to go up in Kenya
In today’s marketplace, Quick Response (QR) codes are a common sight, showing up on everything from simple product packaging to roadside billboards and even menus in estate restaurants. Increasingly, the convenience of accepting payments through a quick code scan is luring more customers and business owners, and regulators such as the Central Bank of Kenya. The QR code system allows businesses to take payments without having to spend money on pricey new equipment deployed by various service providers. With the need for quick and secure digital payment methods becoming even more urgent as e-commerce and online shopping takes root, globally QR codes are increasingly becoming…
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