Kenyan Listed Banking Sector Quarterly Earnings and Operating Metrics
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Banking Sector Growth Drivers
Revenue Diversification:: In Q3'2022, Non-Funded Income (NFI) recorded a 30.1% weighted average growth, an increase from
the 14.3% growth recorded in Q3'2021, with many banks diversifying their revenue sources. Additionally, weighted average
contribution of NFI contribution to total operating income increased to 38.1% in Q3'2022, from the 35.2% weighted average
contribution recorded in Q3'2021. We therefore believe that there exists an opportunity for the sector to further increase NFI
contribution to revenue given the continuous adoption of digital channels by banks and their clients after the pandemic has created
more revenue opportunities for the sector. Additionally, the reintroduction of charges for transactions between bank accounts and
mobile money wallets as from January 2023, is expected to continue spurring NFI growth in the medium-long term due to the
increased adoption of digital channels, which present an avenue for an increase in fees on transactions
Growth in Interest income: We expect interest income growth to remain a key driver in the banking industry, evidenced by the
16.4% growth recorded in Q3'2022, higher than the 15.9% growth recorded in Q3'2021. Additionally, we believe that as more banks
continue to get approvals for their risk-based lending models, the banks will be able to effectively price their risk, expand loan books
and consequently increase the interest income
Cytonn
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