Barclays Bank of Kenya has reported a growth in profit before tax of close to KES 2.56 billion in the 3rd quarter of 2012.  For the 9 months ending 30 September 2012, the bank reports earning KES 9.29 billion in pretax profit which represents 4.7% growth from the KES 8.87 billion the bank reported in the same period last year.

Net lending for the bank in the period increased from KES 98.9 billion to KES 104 billion with the bank earning interest on loans and deposits amounting to KES 11 billion for the 9 months to September 2012 up from interest of KES 10.1 billion a year earlier.

Despite the bank reporting a drop in in its customer deposit book to KES 125.6 billion in September 2012 from KES 135.8 billion a year earlier, Barclays reports to have paid interest on deposits amounting to KES 1.7 billion in the 9 months to September 2012 up from KES 433.8 million a year earlier. This represents a 300% increase in interest paid on deposits.

Central Bank of Kenya Governor Njuguna Ndungu had expressed concerns of banks maintaining high interest spreads despite CBK lowering its base lending rate to the current 11% from 18% earlier in the year. Ndungu said banks were not transferring the benefits of cheaper credit to borrowers, paying low interest rates on deposits and maintaining high interest rates on loans taken by customers.

A month after CBK slashed the key rate to 11%, banks have not reacted to the move leaving borrowers in the cold taking new loans at an average high of 20%.

UPDATE 26/11/2012: Correction, Barclays profit went up 4% and not 40 as previously mentioned. Changed first paragraph and headline to reflect the correct increment.