- Kenya’s banking sector assets grew by KES 1.2 trillion (17.6%) in 2023
- Banking deposits rose by 15.1% in 2023, fueled by mobile and online banking
- Banking sector pre-tax profits decline by 9.1% despite 21.0% increase in operating income
Nairobi, Kenya – August 15, 2024 : Kenya’s economy demonstrated remarkable resilience in 2023, with the banking industry playing a pivotal role in supporting a broad-based economic expansion, even as the economy faced challenges from global and domestic fronts.
According to the State of the Banking Industry (SBI) Report 2024 released by the Kenya Bankers Association (KBA) this morning, the country’s economy achieved a growth rate of 5.6 percent, up from 4.9 percent in the previous year, largely buoyed by a strong performance in the services and agricultural sectors.
In the period under review, the banking industry saw a substantial increase in total assets, which rose by KES 1.2 trillion, a 17.6 percent annual rise in 2023. Meanwhile, the sector’s deposits increased by 15.1 percent, supported by the expansion of mobile and online banking platforms.
Despite the overall growth, the sector faced a rise in non-performing loans (NPLs), which reached 14.8 percent of gross loans, the highest level since 2007. This prompted banks to tighten credit standards and enhance their risk management practices.
The banking industry maintained robust capital positions, with a capital to risk-weighted assets ratio of 18.6 percent, ensuring stability despite economic pressures. While operating income grew by 21 percent, a faster growth in expenses (38 percent), offset the gains, resulting in a 9.1 percent decline in pre-tax profit.
“As we navigate the complexities of the global and domestic economic landscape, the SBI Report serves as an invaluable resource for understanding the dynamics at play within Kenya’s banking sector. We are committed to providing insights that will help stakeholders make informed decisions,” said Raimond Molenje, Acting Chief Executive Officer of the Kenya Bankers Association.
Looking ahead, the SBI Report 2024 expresses cautious optimism for Kenya’s economic outlook, predicting that growth would be anchored on the path of credit growth, particularly the Government’s implementation of expenditure-led fiscal consolidation.The report warns of potential risks from climate change, geopolitical tensions, and fiscal constraints, which could impact the banking sector’s stability.
The full State of the Banking Industry (SBI) Report 2024 is now available on the KBA website: www.kba.co.ke
Access Full Report Here: State of the Banking Industry Report 2024
MEDIA CONTACTS
Dr. Samwel Tiriongo
Director, Research and Policy
Kenya Bankers Association
Email: stiringo@kba.co.ke
About the Kenya Bankers Association
KBA (www.kba.co.ke) was founded on 16th July 1962. Today, KBA is the leading advocacy group in the financial sector and the umbrella body for the banking industry, representing total assets of over USD 60 billion. KBA has expanded its function to include advocating for the banking industry and promoting the development of the financial sector through strategic projects such as launching the industry’s first P2P digital payments platform, PesaLink. In line with the Government’s policy on public-private partnerships, KBA and the Central Bank of Kenya have implemented key projects such as the modernization of the National Payments System through the Automated Clearing House, the implementation of the Real Time Gross Settlement System (RTGS), and the Kenya Credit Information Sharing Initiative. KBA’s members consist of commercial banks and deposit-taking microfinance banks. For more information, visit (www.kba.co.ke).
