Commercial bank executives earned Sh500 million more in salaries last year compared to 2016 even as the sector laid off thousands of staff in cost-cutting efforts.
Data from the latest Central Bank of Kenya (CBK) monitoring report indicates that the total payout for board directors in the 40 commercial banks went up from Sh2.2 billion in 2016 to Sh2.7 billion last year.
The 25 per cent increase comes a year after the interest rate cap introduced through the Banking Amendment Act, 2016. Banks have in the past two years lobbied the Government to repeal the law, saying reduced interest income could increase the cost of business and lower the flow of credit to risky borrowers.
Data from the CBK indicates banks’ total income went down from Sh502 billion in 2016 to Sh486 billion last year, largely from reduced interest income.
“The decrease in income was largely attributed to decrease in interest on advances which declined by Sh33.5 billion occasioned by decreased lending associated with the subdued economic activities,” said the CBK in the report.
Bank directors, however, shook off the fallen incomes to take home record bonuses.
KCB recorded one of the highest payouts to its executives at the group level, going up from Sh342 million in 2016 to Sh397 million last year.