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Over $100 million in profits were generated by the devaluation of the Kenyan shilling in the first quarter of 2023, nearly four times higher than the previous year.

Due to the decline in the local currency, the biggest banks in Kenya enjoyed a collective boost in earnings of over $100.14 million during the first half of 2023, according to sources from the region.

The depreciation of the Kenyan Shilling (KES) relative to the domestic currencies of their regional East African subsidiaries can be blamed for this rise. The banks saw an increase in their earnings, dividends, and total asset value as a result.

The increase was almost four times greater than the gains of $27.35 million reported for the first half of 2022, according to the data.

The paper states that regional subsidiaries prepare their financial statements, or “functional currency,” in their various native currencies. However, these financial statements are converted into Kenyan Shillings, which is used as the reporting currency, when they are combined with the group’s overall financials.

Here are the stats on the Kenya Shilling:

The Kenyan Shilling experienced an 18% depreciation against the Ugandan Shilling from June 2022 to June 2023
Depreciated by 13% against the Tanzanian Shilling
Depreciated by 4.8% against the Rwandese Franc in the same period
Lenders operating in the Democratic Republic of Congo (DRC), which predominantly uses the U.S Dollar, have also reported currency gains when their financials were translated. The gains resulted from the dollar’s strengthening against the Kenyan Shilling, with an appreciation of 19% in the year leading up to June.

Here the Kenyan lenders that have profited from this depreciation:

Equity Group, a financial institution operating not only in Kenya but also in Uganda, Tanzania, Rwanda, the Democratic Republic of Congo (DRC), and South Sudan, reported the most significant currency gain. This gain amounted to $43.51 million, a substantial increase compared to $4.4 million recorded in June 2022
Diamond Trust Bank (DTB ) currency gains increased from $1.4 million in June 2022 to $17.7 million in 2023
I&M’s currency gains surged from $3.4 million to $15.1 million.
NCBA reported a gain of $8.4 million marking a significant increase from the $859,116 recorded in H1 2022
KCB, a regional operator in Uganda, Tanzania, Rwanda, Burundi, South Sudan, and the Democratic Republic of Congo (DRC), registered currency gains amounting to $16.9 million in 2023. During the first half of 2022, the lender reported translated currency gains of $18.1 million.

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