Net profit rose to Sh2.86 billion from Sh2.20 billion a year earlier, the corporate lender said in a statement on Monday.
The bank, however, registered nearly flat growth in its loan book as the impact of interest rate caps continued to bite.
Multinational lender Citibank has reported a 23.08 per cent rise in after-tax profit in the nine months ended September 30 largely on increased income from fees and commissions on loans as well as due to reduced staff costs.
Net profit rose to Sh2.86 billion from Sh2.20 billion a year earlier, the corporate lender said in a statement on Monday.
The bank, however, registered nearly flat growth in its loan book as the impact of interest rate caps continued to bite.
Earnings from fees and commissions on loans and advances jumped nearly four-fold, rising 373.55 per cent to Sh385.52 million. The profits were also further boosted by a Sh400 million reduction in staff costs in the review period to Sh1.18 billion.
Citi’s total operating costs dropped by 13.20 per cent to Sh2.30 billion, helping reduce the impact of a 15.16 per cent drop in net interest earnings to Sh4.03 billion.
The capping of loan charges at four percentage points above the Central Bank Rate (CBR), presently at 10 per cent, in September 2016, has eaten into interest income of most banks, forcing them to enhance efficiencies to protect profit their margins.
Prior to the rate cap law, interest income accounted for about 70 per cent of revenue in the banking industry.
The Central Bank of Kenya has maintained that it is a matter of when and not if the rate cap will be lifted, but has warned banks will have to be more disciplined in pricing loans.
“The worst thing that can happen is when the interest rate caps are removed and banks continue to behave the same way they used to behave in the past. That would be traumatic,” CBK governor Patrick Njoroge said last Friday.
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