These impacts resulted in a decline in overall pre-tax profitability of the industry by 9.6 per cent to $1.3 billion in 2017 from $1.4 billion in 2016.
According to CBK, financial technology (fintech) is expected to continue transforming the banking industry and customer experience in the region.
With the advent of fintech, banking is witnessing unprecedented adoption of emerging technologies like blockchain, artificial intelligence, machine learning and big data analytics.
“The integration of digital technology into the banking business will lead to fundamental changes in how the banking sector operates and delivers value to its customers,” said the report.
It added that banks that will embrace innovation and adopt new technologies will have substantial opportunities to change and improve how they provide financial services and products.
“The decrease in profitability was attributed to a higher decrease in income compared to a marginal decrease in expenses,” said the CBK report.
The total assets of Kenyan banks’ subsidiaries in 2017 stood at $5.1 billion compared to $4.3 billion the previous year.
Tanzania accounted for 28.5 per cent of the total assets followed by Uganda at 21.2 per cent, Rwanda 15.6 per cent, South Sudan at 5.9 per cent and Burundi at 1.8 per cent.
During the year, the gross loans stood at $2.8 billion compared with $2.3 billion the previous year, with subsidiaries operating in Tanzania having the highest loan amount at $937.8 million accounting for 33 per cent of the total loans followed by Uganda at 16.7 per cent and Rwanda at 16.5 per cent.
Gross deposits, on the other hand, posted an increase to stand at $3.9 billion compared to $3.4 billion in the previous year as a result of increased mobilisation of deposits by some banks.