NAIROBI， March 13 (Xinhua) -- Kenyan banks posted flat or reduced earnings in 2016 following interest rate caps introduced last September.
At least four banks have announced their earnings in the last few days， with their results highlighting how the fixing of interest rates has affected the financial institutions.
Kenya capped commercial banks' lending rates last November at 4 percent above the Central Bank Rate (CBR)， which currently stands at 10 percent and further set a minimum interest rate for deposits in interest-earning accounts.
Before the law， lending charges stood at between 19 percent and 27 percent， with proponents of capping then noting that banks were exploiting their customers through their high rates to make billions of dollars in profits.
According to the Central Bank， the banking sector profit in 2015 stood at 1.3 billion U.S. dollars， mainly driven by interest earnings from customers.
However， total commercial banks' earnings has fallen significantly in 2016 if results of commercial banks released in the last few days are indicative.
Kenya Commercial Bank (KCB)， Barclays Bank， NIC Bank and Stanbic are among banks that have announced their results out of the 40 in the east African nation.
KCB， the country's largest bank by assets， posted a flat net profit of 191 million dollars in its 2016 results.
On the other hand， NIC Bank recorded a 3.3 percent decline in earnings， driven by a 35.8 percent growth in total operating expenses which outpaced a 17.5 percent growth in total operating revenue.
Similarly， Barclays Bank and Stanbic Bank recorded 12.6 percent and 9.9 percent reduction in earnings.
For KCB， besides rate capping， regional expansion strategy eroded shareholders value as the bank was affected by the ongoing political instability in South Sudan， coupled with the devaluation of the country's pound and hyper-inflationary effects， which resulted in the bank subsidiary reporting a net monetary loss.
"Of the banks that have released their financial results of 2016， all have recorded a decline in core earnings per share， with the average decline across the banking sector put at 5.4 percent， owing to the tough operating environment as a result of the interest rate caps and higher loan loss provision，" Cytonn， a Nairobi-based investment firm， noted in an analysis Monday.
But it is not all gloom for the banks as interest capping has led to growth in loan advances and deposits.
KCB， for instance， had its loans and advances grow by 11.5 percent to 3.74 billion dollars from 336 million dollars， while customer deposits grew by 5.6 percent to 4.4 billion dollars from 4.12 billion dollars leading to an increase in the loan to deposit ratio to 86.1 percent from 81.5 percent in 2015.
On the other hand， NIC Bank grew it loan book by 1.3 percent， Stanbic by 3.4 percent and Barclays Bank by 15.9 percent.
"This will be the year of reckoning for banks if their current lobbying to repeal the law on capping interest rates would not be successful. Banks will be hit harder by the low interest rates as this would be the first time they would fully operate in the controlled environment，" said Henry Wandera， an economics lecturer in Nairobi.
He added that he expected banks to continue cost reduction measures that include adoption of digital strategies for both loan disbursement and deposit mobilization and retrenchment of staff.
Chinese tourists watch traditional Russian dancing at a sightseeing boat on the Volga River Cheap Canucks Jerseys , Russia. File photo: Courtesy of Beijing Global Travel
The number of Chinese "red tourists" who visit Russia to retrace a shared communist history has been soaring in recent years, contributing to the wave of Chinese visitors to Russia that has grown with the help of closer bilateral relations between the countries, according to industry insiders on Tuesday.
"There definitely is growing interest among Chinese tourists for Russia Sam Gagner Canucks Jersey , especially the older generations, who are nostalgic about the history of Russia," Zeng Qingan Markus Granlund Canucks Jersey , general manager of Beijing Global Travel Ltd, told the Global Times.
Zeng said that since his company started tour groups to Russia nine years ago, the number of participants has increased fast Sven Baertschi Canucks Jersey , especially after the company redesigned its tour routes in 2014 to cover historical Soviet Union era sites, including the Red Square and Victory Square in Moscow, the Lenin Memorial Museum in Ulyanovsk and Moscow State University. The travel firm called it the "Red Tourism" package.
The number of tourists choosing this package has increased by several thousand each year Alex Burmistrov Canucks Jersey , according to Zeng. And this year, which marks the centenary of the 1917 Bolshevik revolution, the number of participates should be even bigger Jacob Markstrom Canucks Jersey , he said, noting that over 2,000 to 3 Brandon Sutter Canucks Jersey ,000 people are expected to book the tour this summer.
Zeng attributed his rising business to the cooperation between the two countries on promoting tourism and exchange programs. In 2015, Chinese and Russian tourism officials signed an agreement to promote red tourism and created the China-Russia Red Tourism Cooperation and Exchange Program.
"Since the start of the Red Tourism program in 2014, an increasing number of people have signed up Derek Dorsett Canucks Jersey , indicating the huge potential for red tourism between China and Russia," Hu Chengjun, a deputy head for the Office National Red Tourism Coordination Group under the China National Tourism Administration Brendan Leipsic Canucks Jersey , was quoted as saying in a press release on Friday. "Red tourism has become a bright spot for bilateral cooperation on tourism."
The rise in red tourism is due to the close relationship between China and Russia and their long history of cultural and people-to-people exchanges, according to Wang Fude, a professor specializing in tourism at Beijing International Studies University.
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