Banks' profits rise 3Q 2006 vs 3Q 2005

So far most banks are reporting greatly increased profits over the same period in 2005. This could be attributed to larger deposits that Banks have been able to garner.

Barclays (+44%) profit announcement, and subsequent share bonus & split, has boosted the share price to over 600/- on 9 Nov 2006.

KCB & SCBK profits & share prices are at record levels even though they did not announce a bonus or split.

Even laggards like NBK have shown a modest but commendable growth in profitability.

It seems the banks have a better handle on bad debts especially KCB & NBK which suffered from poor loan quality due to political lending.

Bankelele normally does a summary of Banks' profits. Since all banks are required by law to publish quarterly results within 60 days, we can expect other banks to report within the next 3 weeks.

I expect most private & listed banks to continue reporting good profits through 3Q 2006. The elections are in 2007 & it will be an interesting time for banks to competitively grow their asset base.

Competition is heating up for banks as more banks (notably Barclays) targets the "underbanked" population. This puts the larger banks (BBK & KCB) in direct competition with Equity Bank & Family Finance.

Furthmore, there are numerous smaller credit firms that will bear the brunt of the big boys as competition intensifies.

I think the increased competition will benefit Kenyans in the next few years as there will be:

• Increased credit availability
• More locations
• Better deposit rates
• Credit availability to a larger part of the population