Deposits in commercial banks in Kenya rose by 430.4 billion shillings ($34.16 billion) in the first six months of 2023 to exceed 5 trillion shillings for the first time in June, driven by five-year high-interest rates, according to the central bank report.

Deposits grew 6.9% to hit a record Sh5.16 trillion in June compared to Sh4.82 trillion in March, Business Daily reported.

Banks have stepped up efforts to retain customers’ deposits by offering the highest interest rates in five years, contributing to a decent increase in time and savings deposits.

The central bank attributed the growth to agency banking and increased digitisation of banking services, which made it more convenient for customers to deposit cash into their bank accounts using their mobile phones.

The deposit rate reached 7.82% in June, the highest level since June 2018, when the rate stood at 8.04%. 

Banks have raised deposit rates for nine consecutive months since September last year to compete against the attractive rates offered by Treasury bills and bonds.
Foreign currency deposits surged to a record high of 1.19 trillion shillings in June from 922.4 billion shillings in December 2022, the central bank said.

(Editing by Seban Scaria )