Lower growth rates across East Africa and turmoil in South Sudan will have an adverse effect on performance of Kenyan banks, the International Monetary Fund (IMF) has said.
The Fund, which has revised Kenya’s economic growth from 6.9 per cent to 6.5 per cent, says cross-border activities have exposed local lenders to economic downturn across the region.
 “In the event of economic distress in Eat Africa, in particular South Sudan, the IMF noted that cross-border activities of Kenyan banks could be adversely affected”, said a statement by the Fund.

Eleven Kenyan banks have subsidiaries in the East African community member states, as well as South Sudan, where three, KCB, Equity and co-operative Bank, have operations.
Others in the region include DTB, Commercial Bank of Africa (CBA), Bank of Africa (BOAK), Guaranty Trust Bank, I&M Bank, Imperial Bank, ABC and NIC Bank.
“Any cross-border business will be affected by the down turn in the sector, but South Sudan has more vulnerability because of their political situation”, said Kenya Bankers Association CEO Mr. Habil Olaka.
According to the Central Bank of Kenya Annual supervisory report for 2014, released in June, Kenyan subsidiaries registered combined profit before tax of Kshs.5.5 billion compared to Kshs.5.2 billion the previous year, with Tanzania accounting for 32 per cent of the total earnings.
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