Folks are perplexed by the paradox of banks generating record profits when the rest of the economy is in upheaval.
According to finance Guru Ephraim Njenga, there are several possible explanations for why local banks profits are overflowing.
“First is that since interest rate capping regime started banks have been lending more to the government than to the private sector. The government has been borrowing like crazy. It is borrowing about KShs 600 Billion from the domestic market annually. For the year ended 31st December 2021, credit to the government rose by 28% while credit to the private rose by 8.6%. Up to 30% of Equity Bank’s gross income came from the government,” Njenga shared on twitter
Equity’s net profit of Sh39.1 billion in the fiscal year ended December is a new high for the bank and the sector, surpassing the Sh34.1 billion achieved by KCB Group, which was formerly the largest bank in terms of earnings and assets.
With a net income of Sh16.5 billion, Co-op Bank was the third-most lucrative among banks that have disclosed their results, after Absa Bank Kenya (Ksh10.8 billion), Standard Chartered Bank Kenya (Ksh9.04 billion), and Stanbic Holdings (ksh9.04 billion) (Ksh7.2 billion).
Equity’s dividend is also the greatest in Kenyan history, surpassing the Sh9.6 billion paid by KCB, the Sh7.1 billion paid by StanChart, the Ksh5.86 billion paid by Co-op Bank, the Sh5.9 billion paid by Absa, and the Sh3.55 billion paid by Stanbic Holdings.
During the biased covid-19 pandemic, the health protocols set were unfavorable to hoteliers and night curfews imposed by the government was harsh to other businesses.
Travellers Beach Hotel and Club, the general manager, Mr Hilary Siele, said the hotel had lost about Sh 50 million from cancelled meetings.
Plaza Beach Hotel marketing manager Daniel Ogechi said the establishment lost more than Sh10 million from cancelled meetings and was forced to lay off half of the work force.
In Nyanza and Western region, Lake Victoria Tourism Association (LVTA) chairman Robinson Anyal said a number of operators closed their premises while others have scaled down their staff.
Bookings for conferences at the Golf Hotel in Kakamega County plummeted by 40%. A manager, Ms Maureen Njuru, stated that many clients had turned to virtual meetings.
Mr Boaz Nyangenya, a hotel owner in Kisii, said many players were on a tightrope and on the point of despair. He was compelled to lay off employees.
According to data from the Kenya National Bureau of Statistics (KNBS), the number of individuals in work decreased to 17.84 million between January and the end of March, down from 18.09 million the previous quarter.
About 292,020 jobs held by workers below 25 years were lost in the quarter ended March. About 149,897 jobs held by workers aged between 40 and 60 were let go as companies reinvented themselves to survive.
According to the Quarterly Labour Force Survey, roughly 2.495 million people were unemployed at the end of March, up from 2.2944 million in the same month last year.
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