- The report shows that 11 per cent of large banks (Tier 1) likely to send home employees
- At least 22 per cent of them had shown indications to hire more staff in March before the country reported its first coronavirus case.
Image: FILE
Image: FILE
Large banks are expected to cut on staff within the year due to increased utilisation of digital platforms, and reduced business prospects arising from the Covid-19 pandemic.
The July Central Bank of Kenya (CBK)’s Monetary Policy Committee (MPC) survey report shows that 11 per cent of Tier 1 lenders are likely to send home employees and expressed reduced optimism compared to five per cent in May.
At least 22 per cent of them had shown indications to hire more staff in March before the country reported its first coronavirus case.
Most medium, small lenders and microfinance are largely expecting to maintain the status quo, with some opting to shelve redundancy plans after restored optimism following the lifting of travel restrictions.
Chief executives of non-banking institutions share a similar sentiment, with the majority saying their activities were severely affected by the measures put in place to contain the spread of the pandemic, and that they had to make adjustments in their staffing levels in the immediate period following the pandemic.
However, the report shows a slowdown in further lay-offs, with some respondents indicating that they were keen on taking advantage of new opportunities and the stimulus package offered to local firms, such as motor vehicle assemblers and hotels.
Although 31 per cent of those in the tourism and hotel sector had scheduled redundancies, they have revised the plan especially after the reopening of domestic flights. The positive sentiment is likely to increase after Kenya resumed international flights on August 1.
Generally, the private sector credit growth is expected to expand this month and remain so for the remainder of the year, on increased demand by businesses following the gradual re-opening of the economy and increased liquidity of the banking system.
“Banks have revised their optimism upwards largely due to the reopening of the economy, in addition to the fiscal stimulus and monetary policy measures put in place, soundness and stability of the banking system,” CBK said.
However, some respondents indicated that the demand for credit may remain moderate largely due to uncertainties with the rising Covid-19 cases, and credit risk, the report, says the report.
Central Bank’s July data shows that credit to the private sector grew by 7.61 per cent in the year to June to record Sh2.69 trillion – the slowest momentum since January when it grew at 7.3 per cent.
Generally, both bank and non-bank CEOs were optimistic about the country’s economic growth in July and August compared to May and June as the economy opened up.