BANKING | Kenyan Banks Report $483 Million in Forex Transaction Losses in 2024

Kenyan banks recorded currency losses totaling KES 57 billion ($438.3 million) in the financial year ending December 31 2024, due to the strengthening of the Kenyan shilling (KES) against the U.S dollar and the currencies of neighboring countries where they operate.

This marked a sharp reversal from 2023, when the Kenyan shilling had depreciated by between 7.1% and 19.7% against these regional currencies, resulting in currency translation gains of KES 31.9 billion ($245.94 million) for the banks.

🇰🇪🇨🇩REPORT | #Kenyan Banks Rake in Double Profits From Operations in Democratic Republic of Congo, Says CBK

The DRC market contributed the highest proportion of the total earnings by Kenyan banks’ regional subsidiaries, equivalent to 45.52 percent (KES 30 billion or $229… pic.twitter.com/4ayATb5uKB

— BitKE (@BitcoinKE) August 28, 2024

Equity Group, which operates regional subsidiaries in Uganda, Tanzania, Rwanda, the DRC, and South Sudan, now sees half of its KES 1.8 trillion ($13.8 billion) balance sheet tied to these markets. In 2024, the group recorded a currency translation loss of KES 22.8 billion ($175.3 million) – down from a gain of KES 17.4 billion ($133.8 million) in 2023.

The bank also attributed part of the drop in its loan book – from KES 887.4 billion ($6.8 billion ) to KES 819.2 billion ($6.2 billion) – to the negative impact of currency translation losses on loans issued through its regional subsidiaries.

Kenya’s major corporates have established themselves across the East and Central Africa region.

Major local banks such as Equity Group, KCB Group, NCBA, DTB Group, Stanbic Bank, and I&M Group have regional subsidiaries operating in countries including Uganda, Tanzania, Rwanda, South Sudan, Burundi, and the Democratic Republic of Congo (DRC).

According to reports, the banks have been doing pretty well in the overseas markets, but the constant currency depreciation poses a challenge to their finances.