surge in income from interest, with analysts suggesting that this points to growing expenses around financing advanced by banks in the country.
NIC Bank said in a statement to the Nairobi Securities Exchange On Wednesday that after tax profits had surged to Sh3 billion, a rise from the previous year’s Sh2.7 billion recorded in after tax profitability.
The Nation online said local industry and companies in Kenya were facing rising costs around financing extended by banks, which explains the Kenyan bank’s rise in interest income. Analysts were reported saying the costs of funds had spiked in the past year.
“What we are seeing so far is the high interest expenses they are paying on customer deposits, which has somehow eaten into their earnings,” Kuria Kamau, an analyst at Kestrel Capital was quoted saying.
Total revenue generated from interest during the review period quickened by 67.9 percent to Sh11.5 billion. The previous year, the bank reported Sh6.8 billion revenue from interest income.
Loans and advances during the same period rose 64 percent to Sh9.87 billion, up from the previous year’s Sh6 billion.
NIC Bank said it had made out payments of about Sh5.98 billion in interest to customers who maintained deposits with the financial institution. This represents a massive 134 percent jump.
Analysts at Africa Investment Bank said in a note: “Medium to long-term investors, however remain bullish on the financial sector which is among the pillars that are expected to drive economic growth going forward.”