Kenya’s largest banks saw a collective increase of over $100.14 million in profits during the first half of 2023 due to the local currency’s slump, local reports indicate.
This increase can be attributed to the devaluation of the Kenyan Shilling (KES) against the local currencies of their regional East African subsidiaries. As a result, the banks experienced growth in their earnings, dividends, and overall asset value.
Kenyan 🇰🇪 banks made a record $100 million from currency gains in the first half of 2023, as the Kenyan Shilling (KES) weakened against regional currencies.
This is nearly a 4x increase from the same period in 2022. pic.twitter.com/aNmWvpc1Tn
— BitKE (@BitcoinKE) August 31, 2023
Data reveals that the increase was almost four times higher compared to the gains of ~$27.35 million reported during the first half of 2022.
The report notes that regional subsidiaries compile their financial statements in their respective home currencies, known as the functional currency. But when these financial statements are consolidated into the group’s overall financials, they undergo a currency translation process into Kenyan Shillings, which serves as the reporting currency.
Here are the stats on the Kenya Shilling:
- The Kenyan Shilling experienced an 18% depreciation against the Ugandan Shilling from June 2022 to June 2023
- Depreciated by 13% against the Tanzanian Shilling
- Depreciated by 4.8% against the Rwandese Franc in the same period
- Lenders operating in the Democratic Republic of Congo (DRC), which predominantly uses the U.S Dollar, have also reported currency gains when their financials were translated. The gains resulted from the dollar’s strengthening against the Kenyan Shilling, with an appreciation of 19% in the year leading up to June.
Here the Kenyan lenders that have profited from this depreciation:
- Equity Group, a financial institution operating not only in Kenya but also in Uganda, Tanzania, Rwanda, the Democratic Republic of Congo (DRC), and South Sudan, reported the most significant currency gain. This gain amounted to $43.51 million, a substantial increase compared to $4.4 million recorded in June 2022
- Diamond Trust Bank (DTB ) currency gains increased from $1.4 million in June 2022 to $17.7 million in 2023
- I&M’s currency gains surged from $3.4 million to $15.1 million
- NCBA reported a gain of $8.4 million marking a significant increase from the $859,116 recorded in H1 2022
- KCB, a regional operator in Uganda, Tanzania, Rwanda, Burundi, South Sudan, and the Democratic Republic of Congo (DRC), registered currency gains amounting to $16.9 million in 2023. During the first half of 2022, the lender reported translated currency gains of $18.1 million.
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