Sunday, July 21, 2024
HomeAfricaKenya’s Central Bank Data Reveals Staggering Figures for Savings in Current Accounts

Kenya’s Central Bank Data Reveals Staggering Figures for Savings in Current Accounts

Despite the comparatively modest yields paid by Kenyan banks on demand deposits, savings in current accounts increased by Sh98.1 billion in the first seven months of the year.

According to data from the Central Bank of Kenya (CBK), there was Sh1.7 trillion in cash in freely accessible savings accounts in July, an increase of Sh38.9 billion from June.

Demand deposits, or cash in current accounts, have increased more quickly than time deposits, a sign of Kenyans’ rising spending requirements and preference for keeping their money in accounts with rapid access.

Compared to time deposits, the interest rate on savings is smaller. According to official data, commercial banks paid demand deposits an average interest rate of 3.97% as opposed to the 8.1% provided on term or fixed deposits. All types of deposits saw a large rise, with fixed deposits growing to Sh1.76 trillion as a result of higher interest rates given by banks that were competitive with other investment categories.

In July, lenders gave an average return of 8.1% on long-term deposits, the highest rate since the beginning of 2018, when yields reached 8.17%. For the first time in 15 months, bank interest rates exceeded inflation, which stood at 7.3%, indicating bankers’ aspirations to recruit cash-rich consumers.

The high-interest rates on government bonds are notwithstanding a reduction in the domestic borrowing plan from Sh587.4 billion to Sh415.3 billion.

Foreign currency deposits in banks increased by 35% from January to July, totaling Sh1.2 trillion. The rise has been mostly due to the shilling’s depreciation, which has lost 19.6% of its value since the start of the year.

Kenya’s National Treasury recently reduced its domestic borrowing goal by Ksh172 billion ($1.12 billion), although this adjustment is smaller than the previously anticipated cut of Ksh270 billion ($1.84 billion).

Source: Africa Business Insider



Most Popular