The top eight large banks doubled their net earnings year-on-year in the third-quarter of 2021 to Sh28 billion, being the second consecutive quarter that net earnings have surged. Upon further review, however, these profits don’t look quite as robust.
Three-quarters of the pre-tax earnings was not really ‘earned’ but came from write-backs of impairment losses recognized in 2020, the result of accounting maneuvers. Broadly, for banks, the concept of impairment of financial assets refers to the amount by which the carrying amount of an asset exceeds its recoverable amount.
