Banks increase T-bill holdings by Sh170 billion

Commercial banks increased holdings of government securities by Sh170 billion to hit the highest level in nine months as income from their assets rose.

According to data from the Central Bank of Kenya (CBK), the banks had 55.7 per cent of the gilt-edged instruments as at July 20, compared to below 55 per cent at the beginning of the year.

The last time the institutions held close to 55.7 per cent of government securities was on October 13 last year when the proportion stood at 55.8 per cent.

Data compiled by Business Daily showed that the banks also increased their earnings from government securities to Sh29.176 billion as at the end of the first quarter of this year compared to Sh24.372 billion during similar period last year — Sh4.8 billion more.

In terms of the total cash holdings the banks had in government domestic borrowing, it increased by Sh170.7 billion to stand at Sh1.393 trillion as at July 20 compared to Sh1.222 trillion on October 13 last year.

Domestic public debt now stands at Sh2.5 trillion compared to Sh2.19 trillion last October following a ramping up of state borrowing locally.

The State was scheduled to borrow Sh293.8 billion by June in a revised budget compared to Sh275.9 billion in the printed estimates — about Sh18 billion more than initially programmed, thereby serving as a boon for commercial banks seeking local fixed-income investment opportunities.

During this fiscal year, government borrowing in the domestic market is expected to be limited to Sh279.5 billion as part of efforts to push down the level of fiscal deficit to 5.7 per cent.

This is among the key conditions agreed on with the International Monetary Fund that has offered Sh150 billion as an insurance facility against foreign exchange shocks.

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