Business; Kenyan banks are facing hardships due to the weakening economy caused by the Russian war in Ukraine and the harsh Covid19 pandemic.
Notably, the lenders who were significantly handed a severe blow by the Covid-19 pandemic started to catch up in the year 2022 on a strong advance, posting double-digit profit growth in the six months to June 30.
On a high note, the lenders’ growth in profitability was at a large percentage increased revenues from banking transactions, non-interest income, and interest income from heavy investments in government securities.
Given advanced procedures, the industry’s gross outcome went up by 9.3% of Ksh62.6 billion ($517.35 million) from Ksh57.3 billion ($473.55 million) in the period, according to data from the Central Bank of Kenya.
However, the promising performance came under a weakening economy whose growth in the second quarter of April to June 2022 went down by 5.2% compared to 11% in the same period of 2021.
Giving a statement, the Kenya Bankers Association-KBA said that the risks in the economy comprise weakening currency, falling forex reserves, falling revenue collections, and skyrocketing inflation that could filter into the banking sector dampening prospects for the entire year.
Notably, Kenya’s inflation for September made a rise to 2% from 8.5% in August’s fuel and food prices.
On the other hand, the shilling has plunged to a record of Ksh121 against the US dollar.
In addition, the Kenya Revenue Authority-KRA has failed to meet revenue targets three months into the 2022/2023 fiscal year due to the harsh business environment and inflation.
However, the taxman has significantly collected Ksh465.2 billion ($3.84 billion), or 22.5% of the original estimates of Ksh2.07 trillion ($17.1 billion) and 89.8% of the prorated estimates of Ksh518 billion ($4.28 billion).
On a high note, Kenya’s president has already ordered expenditure cuts of up to Ksh300 billion ($2.47 billion) for a smooth economic ride.
Additionally, the National Treasury Cabinet Secretary nominee Njuguna Ndung’u told a vetting panel that he will reduce borrowing in order to pay off expensive domestic debts in an attempt to improve the country’s finances.
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