The Kenyan Banking Sector shown continued growth in the second quarter of 2012 compared to first quarter period that ended March 2012. According to a report released by the Central Bank of Kenya, the size of assets standing at KES 2.2 trillion compared to KES 2.1 trillion march while loans & advances are worth KES 1.3 trillion from KES 1.2 trillion. The deposit base for the 2nd quarter stood at KES 1.7 trillion up from KES 1.6 trillion the previous period.
As at 30th June 2012 , the industry realized profit before tax of KES 53.2 billion as opposed KES 24.7 billion for the period ended 31st March 2012. During the same period, the number of bank customer deposit and loan accounts stood at 14,893,628 and 2,051,658 respectively.
According to the Central Bank , important industry indicators show that the sector has remained sound and resilient from the first quarter to second quarter of 2012. CBK says that the financial sector is developing and deepening faster than the overall economy. It grew by 9.0% in 2010 and 7.8% in 2011 while the economy grew by 5.8% and 4.4% in 2010 and 2011 respectively. This, the report says, has been driven by financial infrastructure that has enabled financial inclusion.
The growth of micro deposit accounts (accounts with average balances of Ksh 100,000 and below) has been a critical contributor to the development and deepening of the banking sector. These accounts have increased from about 2.14 million in 2005 to 14.0 million in June 2012. The number of loan accounts remains low at just over 2 million. This, according to CBK, will need to increase to speed up reduced unit costs of loans for the banks. In this regard, the Central Bank says it will work with Government and the banking sector to implement reforms geared towards reducing the cost of credit to increase the number of Kenyans able to access credit.
Last month, the MPC reduced the base lending rate to 16% from 18% a move that has resulted to many commercial banks reducing their lending rates by the same margin. This is aimed at encouraging borrowers to take up loans.
The report says that as at June 30, 2012, the banking sector comprised 43 commercial banks, 1 mortgage finance company, 6 deposit taking microfinance institutions, 5 representative offices of foreign banks, 115 foreign exchange bureaus and 2 credit reference bureaus.