Kenya’s nine top-tier banks have generated a total of Sh110.39 billion in interest income from their investments in government securities in six months.
Disclosures from the lenders’ unaudited financial statements show that the interest income they earned from their investments in government securities increased by 17.87 percent to Sh110. 37 billion in the six months to June 30, from Sh93.67 billion in the same period last year.
Among the biggest beneficiaries was KCB Group which generated returns of Sh25.47 billion from government securities during the period under review, followed by Equity Group (Sh28.32 billion), Diamond Trust Bank (Sh12.72 billion) and Co-operative Bank (Sh12.72 billion). 6 billion) and I&M Group (Sh6.92 billion).
On the other hand, NCBA Group, Absa Bank Kenya and Standard Chartered Bank Kenya saw interest income on government securities fall by Sh250 million, Sh410 million and Sh550 million respectively.
In the 2023/24 financial year, domestic borrowing by the government via treasury bills and bonds rose by 13.3 percent to Sh5.24 trillion from Sh4.63 trillion, with commercial banks holding 43.5 percent of domestic debt.
Treasury bonds accounted for 85.5 percent of government domestic debt, followed by Treasury bills at 11.4 percent.
The stock of treasury bonds rose 15.3 per cent to Sh4.63 trillion in June 2024, from Sh4.01 trillion in June 2023 while bonds rose a meager 0.1 per cent to Sh632.5 billion.
“This is consistent with the government’s goal of managing refinancing risks and lengthening the maturity of domestic debt through gradually reducing the stock of Treasury bonds and issuing medium- and long-term Treasury bonds,” the Treasury notes in its report. Annual public debt report 2023.
It is worth noting that commercial banks’ lending to the private sector slowed mainly due to perceived credit risks arising from uncertainty related to economic performance, and instead, they chose to channel liquidity into risk-free government securities.
In July this year, global rating agency Moody’s Investors Services downgraded the credit ratings of KCB Kenya, Kenya Cooperative Bank and Kenya Equity Bank, largely due to their increased sovereign exposure in the form of government securities issued by a government with poor credit. Introductory account.