Kenyan Listed Banking Sector Quarterly Earnings and Operating Metrics
Recent Developments in the Kenyan Banking Sector....
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3. Asset Quality:
Asset quality for listed banks deteriorated in Q3'2022, with the Gross Non-Performing Loan ratio (NPL) increasing marginally by 0.1%
points to 12.3%, from 12.2% in Q3'2021. The deterioration of the Assets quality was mainly skewed by an increase in KCB Group's
NPL ratio to 17.8% in Q3'2022, from 13.7% in Q3'2021, attributable to the continued high exposure to corporate loans at 47.8% in
Q3'2022, which have been impacted by delayed recovery from COVID-19, increased inflationary pressures and pending government
bills. However, according the Quarterly Economic Review Q3'2022 released by the Central Bank of Kenya, the asset quality for the
entire banking sector improved, with Gross NPL ratio declining by 1.0% points to 13.7% in Q3'2022, from 14.7% recorded at the
end of Q2'2022. The improvement in asset quality was mainly driven by 4.4% decline in gross Non-Performing Loans (NPLs),
coupled with a 2.5% increase in gross loans in the period under review. Going forward, we expect credit risk to remain elevated in
the short term given the soaring inflationary pressures which are expected to continue to weigh on the business environment
Cytonn
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