Banks demonstrated a notable shift toward government securities during the period. Six of the nine listed lenders increased their holdings, with Stanbic Kenya recording the highest rise, an 82.6% jump to Ksh 74.2 billion
A review by Mwango Capital has revealed that most listed banks on the Nairobi Securities Exchange (NSE) experienced contractions in their loan books during the third quarter of 2024 compared to the same period in 2023. Despite this, year-on-year profitability growth was evident, with seven of the nine tier-one banks recording double-digit gains.
Standard Chartered Kenya stood out in Q3 2024, posting a 5.4% increase in its loan book to Ksh 151.3 billion, making it the highest performer in loan growth. Meanwhile, KCB Group and Co-operative Bank saw marginal growth of 0.5% and 0.9%, bringing their loan books to Ksh 1.1 trillion and Ksh 381.3 billion, respectively. Stanbic Kenya reported the largest decline, with its loan book contracting by 12.8% to Ksh 218.8 billion.
Appetite for Government Securities Rises
Banks demonstrated a notable shift toward government securities during the period. Six of the nine listed lenders increased their holdings, with Stanbic Kenya recording the highest rise, an 82.6% jump to Ksh 74.2 billion. However, NCBA, KCB Group, and Absa Bank Kenya reduced their holdings by 11.1%, 2.1%, and 8.5% to Ksh 178.4 billion, Ksh 318.6 billion, and Ksh 97.5 billion, respectively.
Profitability: KCB Surpasses Equity for the First Time Since 2019
In terms of profitability, KCB Group recorded a profit after tax (PAT) growth of 49% to Ksh 45.8 billion for the nine months ending September 2024, surpassing Equity Group’s PAT growth of 13.1%, which reached Ksh 40.9 billion. This marks KCB’s first lead over Equity since Q3 2019.
Standard Chartered also achieved impressive quarterly PAT growth, surging 62.7% to Ksh 15.8 billion, while NCBA posted the slowest growth, up 3.1% to Ksh 15.1 billion.
Asset Quality: Rising Non-Performing Loans (NPLs)
Absa Kenya recorded the sharpest rise in gross non-performing loans (NPLs), which increased by 42.7% to Ksh 42.7 billion. KCB Group held the largest stock of NPLs in the sector, with a 15.1% rise to Ksh 215.3 billion. This was largely attributed to challenges in the manufacturing, real estate, trade, and construction sectors. Notably, KCB Kenya and the National Bank of Kenya (NBK) contributed to this with NPL increases of 12.8% and 36.2% to Ksh 166.7 billion and Ksh 30.2 billion, respectively.
Conversely, Standard Chartered achieved a significant reduction in NPLs, down 48.4% to Ksh 12.1 billion. NCBA and I&M Group also saw improved asset quality, with reductions of 4.3% and 1.3% in their gross NPL books, respectively. The review paints a complex picture of Kenya’s banking sector, highlighting the dual challenges of managing asset quality and maintaining profitability amidst shifting market dynamics
