In Kenya, the banking environment was characterised by heightened uncertainty following three commercial banks being put under statutory management, effects of interest capping regulation at no more than 400 basis points above CBR for loans and not less than 70 per cent of CBR on interest earning deposits, credit to private sector contraction, bear run on the Stock markets and skewed liquidity amongst banks.
The macro- economic environment was also characterised by foreign exchange rate instability, rising inflation, devastating drought resulting in famine, food inflation and negative impact on water supply, hydro energy and security.
On the regional front, the environment was characterised by uncertainties due to the electioneering in Tanzania and Uganda, the transitions in South Sudan and DRC. In addition, the pending 2017 elections in Kenya and Rwanda played a role in slowing economic activities as investors’ exercised caution in their investment decisions.
The year also witnessed a slump in global commodities prices leading to a slowdown in regional trades and economic growth. The impact of the slow down effect of the China economy which has affected global commodity prices and political events in The US and UK are also being felt.
Speaking while releasing the end of year results, the Group Managing Director and CEO Dr. James Mwangi said “The Group is well positioned to weather shocks from the environment as reflected in the Group’s liquid and well capitalised balance sheet. The Group closed the year with liquidity levels of over 48 per cent and total capital adequacy ratio of over 19 per cent. Our value proposition to shareholders is solid and our strategy continues to pay off with an Earning Per Share (EPS) of KES 4.38. As a result of this, the Board has proposed a dividend payment totalling KES 7.547 billion.”