Equity Bank’s #ticker:EQTY forex trading income rose 22 percent to Sh819 million in the first quarter of the year as the bank handled larger volumes of diaspora remittances.
The lender last week said it handled Sh30.93 billion worth of remittances during the quarter, which was an increase of 27 percent on the Sh24.4 billion it did in the corresponding period of last year.
Equity Bank chief executive James Mwangi said in the quarterly briefing the management is prioritising forex trading commissions rather than remittance fees as they look to drive up volumes sent home through the lender’s channels.
“This rise in forex trading income is tied up to our success in diaspora banking. Since the remittances come in dollars, it is allowing us to build a sizeable pool of hard currency to drive our forex trading in the market,” said Mr Mwangi.
As a result, the fees earned from handling remittances grew at a much slower pace than that of volumes transacted, at five percent or Sh9 million to Sh192 million.
The lender has been riding on partnerships with global money transfer platforms such as PayPal, and MoneyGram, World Remit and hellopaisa to boost its diaspora remittance volumes.
In total, Kenyans abroad sent home Sh67.3 billion in the first quarter of the year, as per official data by Central Bank of Kenya.
Remittances have for the past three years been the top source of foreign exchange earnings for the country.
Last year, remittances stood at Sh273 billion, ahead of tourism receipts at Sh157.36 billion, horticulture exports at Sh153.68 billion and tea at Sh140.86 billion.
These receipts have offered support to the shilling in the foreign exchange market and helped the CBK to build up a sizeable chest of reserves that at the end of last week stood at $8.07 billion (Sh815 billion) equivalent to 5.19 months of import cover.
Diaspora inflows are, however, estimated to be much higher than the Central Bank numbers, which are based on what is remitted through official channels.