Jaindi Kisero writes about Kenya banks this week with a note of concern:

I have been reading through data based on a review of the Q1 2017 regulatory disclosure that banks must publish quarterly in fulfilment of the requirements of prudential guidelines by the Central Bank of Kenya. The statistics make for very depressing reading.

• Big banks are not lending to smaller ones; they are concentrating on lending to their fellow tier 1 banks.
•  Small banks are lending to one another at rates more than double what the big one are doing among themselves.
•  A number of small banks have been taking deposits at rates higher than the 7%  limit set by the rate-capping law.
• The number of banks that are utterly dependent on the Central Bank window have increased to four.
• A number of the small banks are yet to reprice their loans and are, therefore, still charging customers rates above the rate cap of 14%, running the risk of regulatory penalties.
• Banks have continued to lend money to companies that are not able to pay back. The banks are usually reluctant to discontinue lending out of the fear that such action will recognise their own losses on the loans.

In sum, the data reveals that too many of our small banks are facing a dangerous cocktail of declining margins, declining liquidity, and deteriorating asset quality.