- How did Kenyan banks perform in Q3 2023?
- With easing macroeconomic challenges, how have the banks rebounded?
Geographical diversification boosts profitability
Kenyan banks have positioned themselves as Eastern African regional powerhouses with a strategic presence in Tanzania, Uganda, Rwanda, Burundi, South Sudan, and recently the Democratic Republic of Congo (DRC).
The macroeconomic challenges in Kenya, especially during the first half of 2023, including a rise in interest rates due to higher inflation and a significant depreciation of the Kenyan shilling against the US dollar, affected the business environment, including banks.
The banks' diversified geographical presence has aided in mitigating these challenges, with some subsidiaries outperforming the Kenyan business for the 2023 year-to-date (YTD) performance. We begin the analysis by looking at the top-line performance.
Higher interest rates supported interest income growth.
Net interest income rose due to the higher yields following the interest rate hikes across the geographical operations of the tier-one banks. The central banks across the Eastern Africa region
