Kenya Strategy Outlook 2018 – A Post Election Revival?

Following on from the prolonged election cycle of 2017, the political and economic outlook for Kenya in FY18 looks considerably improved. However, issues such as bank lending interest rate caps and IFRS9’s impact on the banking sector continue to concern investors. We believe the interest rate caps, whilst not being retracted completely, will be modified in 2H18 resulting in a widening of the rate capping bands. Following the implementation of IFRS9 in FY18, although we expect some banks in the Kenyan banking sector to seek additional Tier 1 and Tier 2 capital in order to boost capital ratios, we understand the Central Bank of Kenya is currently seeking industry comments on its proposal to give banks upto five years to build capital buffers.

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