After a long quiet period, banks results for the second quarter of 2020 have started tricking in. This week saw four large banks – KCB, Cooperative, Stanbic and NBK all publish their June results, showing the impact of COVID-19 that started to be felt after the first quarter of the year.
The bank rankings are (1) Kenya Commercial Bank – Kshs 730 billion assets, (4) Cooperative Bank – 505 bn, (7) Stanbic Kenya – 350 bn, and (11) National Bank – 119 bn which is now a subsidiary of KCB
- There has been less banking and economic activity: Stanbic was the first to flag this in its quarter-one results. KCB’s half-year results showed branch tellers handled 20% fewer transactions compared to 2019. There was also a 20% reduction in ATM transactions, while the number of mobile transactions did not increase significantly despite fee waivers.
- There was a decline in mobile loans advanced at KCB from Kshs 103 billion to 90 billion.
- There has been extensive restructuring of loans. KCB has restructured Kshs 101 billion, Co-op 39 billion, and Stanbic 38 billion.
- IFRS-9 is being set aside as the world grapples with recovering from COVID. While KCB’s provisions were up Kshs 8 billion, after absorbing National Bank, and their non-performing assets increased from 8% to 13%, bank provisions have not increased significantly.
- Growth in deposits at large banks, a flight to safety, has not been matched by an increase in lending to customers. There has been much faster growth in deposits than with loans, that has ended up in higher treasury bills and liquidity at banks.
- Reduction in profits: KCB half-year profits were down 40% compared to 2019, while Stanbic’s were 36% lower.
- The banks are seeing improvements now that the economy has opened up and travel restrictions were lifted in July 2020, all helping the manufacturing, floriculture and tourism sectors.