The Kenyan Banking Sector recorded growth in the quarter ended March 31, 2021, compared to
the quarter ended December 31, 2020, a survey by the Central Bank of Kenya (CBK) has shown.
Total deposits increased by 2.8 percent from Ksh4.021 trillion in December 2020 to
Ksh4.133 trillion in March 2021.
The aggregate balance sheet increased by 2 percent to Ksh5.5 trillion in March 2021
from Ksh5.4 trillion in December 2020.
Gross loans increased by 1.4 percent from Ksh2.999 trillion in December 2020 to
Ksh3.040 trillion in March 2021. The growth in gross loans was mainly due to increased
advances in the financial services, and energy and water sectors.
The asset quality, measured by gross nonperforming loans to gross loans ratio deteriorated from 14.1 percent in December 2020 to 14.6 percent in March 2021. This was attributed to a slowdown in business activities as a result of the adverse effects of the COVID -19 pandemic.
The total capital adequacy ratio marginally decreased from 19.2 percent in December 2020
to 18.9 percent in March 2021. This is as a result of a lower increase in total capital (1 percent) as
compared to the increase in total risk-weighted assets (2.7 percent). The capital adequacy ratio
reported in the two periods were above the minimum statutory limit of 14.5 percent.
Quarterly profit before tax increased by Ksh22.3 billion from Ksh23.6 billion in December 2020 to Ksh45.9 billion in March 2021. This was as a result of a higher decrease in expenses (22.8
percent) as compared to a decrease in income (4.6 percent). Return on Assets increased to
2.7 percent in March 2021 from 1.6 percent in December 2020.
Return on Equity increased from 13.8 percent in December 2020 to 22.0 percent in March 2021.
This is as a result of a higher increase in quarterly profits before tax (94.7 percent) than increase in total shareholders’ funds (2.4 percent).
During the quarter ended March 2021, liquidity in the banking sector increased from 54.6
percent in December 2020 to 56.3 percent in March 2021. This was well above the minimum statutory ratio of 20 percent.