In a year marked by significant economic challenges, Kenyan banks have outdone themselves, posting a remarkable profit of Sh240.1 billion in 2024. This milestone comes despite the turbulent financial landscape of the nation. But what does this mean for the average Kenyan and the broader economy? As we delve into the details, let’s explore the interplay between high profits and economic hardship, drawing insights from leading financial figures.
Surprisingly, amid this financial success, banks reported a fall in lending. High interest rates have been cited as a contributing factor. This contradictory trend presents an intriguing question: how can such profits coexist with reduced lending? It seems the answer lies within the strategic maneuvers of the banks themselves.
Even as lending decreased, Kenyan banks achieved a collective revenue that shattered previous records. The resilience of these institutions in face of adversity invites admiration, but also introspection into the strategies that propelled their success.
Interestingly, the central bank decided to lower the benchmark lending rate from 13% last June to 10.75% by the end of the year. This move aimed to stimulate economic activity by alleviating borrowing costs for consumers. Will this strategy catalyze significant economic benefits, or does more need to be done to ensure those benefits are felt by the average citizen?
Top Earning Banks in Kenya
According to The Star Kenya, KCB Group spearheaded the charge with an astonishing net profit of Sh61.8 billion, marking an impressive 64.9% growth in 2024. Reflecting on the implications of such growth, one might ask what principles or strategies were the cornerstone of their success.
In a gesture of confidence, the bank proposed a total dividend of Sh3 per share, totaling a distribution of Sh9.6 billion. Reflecting on this, KCB Group Chairman Joseph Kinyua emphasized, “Despite the tripling of earnings, the bank is always ring-fencing its operations by preserving capital and managing expenses to ensure long-term viability.” A balanced approach to growth is indeed key to ensuring sustainable success.
Kinyua also expressed optimism for the upcoming year. “We are excited about the strong profits witnessed across all entities. We are optimistic that there will be a pickup in economic activity this year across markets, supported by resilience of key service sectors and agriculture, expected recovery in growth of credit to the private sector, and improved exports,” he said. An insightful outlook grounded in anticipation of economic recovery rather than mere exuberance.
Following closely, Equity Bank posted revenues of Sh48.8 billion. This financial prowess has led to an ambitious plan to increase its dividend from Sh15.1 billion in 2024 to Sh16 billion, set to be disbursed by May 23 to registered shareholders. It is fascinating to ponder how shareholder satisfaction is balanced with reinvestment priorities to maintain growth trajectories.
Co-operative Bank of Kenya reported a net profit of Sh25.5 billion, signifying a 9.8% rise while maintaining its dividend at Sh1.50 per share, resulting in a distribution of Sh8.8 billion. One might reflect on whether a conservative dividend strategy could enhance long-term stakeholder value.
Among the notable performers, NCBA Group registered a subtle increase to Sh21.86 billion, or 1.9 percent. Yet, the bank increased its dividends, highlighting an increment of 15.8% to Sh5.50 per share, amounting to Sh9.06 billion. This marks the fourth consecutive year of dividend increments. The Kenyatta and Ndegwa families, notable beneficiaries, echo a wider narrative about wealth concentration in the banking sector.
During the release of its financials, the NCBA stated, “The board has resolved to recommend to the Shareholders… the payment of a final dividend for the year of Sh3.25 per share, which, together with the interim dividend of Sh2.25 per share, brings the total dividend for the year 2024 to Sh5.50 per share.” Yet, one might question whether this upward trajectory in shareholder returns is the best measure of successful corporate governance.
Absa Bank Kenya reported a 27.5 percent increase in earnings to Sh20.87 billion, alongside an increase in its dividend to Sh1.75 per share, totaling Sh9.5 billion. Meanwhile, at Sh45 per share, Standard Chartered Bank Kenya issued the most generous dividend relative to share value. Such gestures are reminiscent of Sir Winston Churchill’s assertion, “We make a living by what we get, but we make a life by what we give.”
These impressive financial performances paint a picture of a resilient banking sector in Kenya. However, they also raise important questions about inequality, responsible lending practices, and how the banking sector supports the broader economy.
Edited By Ali Musa
Axadle Times International – Monitoring.
