Kenya’s three largest retail banks KCB, Equity Bank, and the Co-operative Bank have recorded a massive drop in profits during the first quarter of 2019. The slump in profits is due to weak interest on loans, increasing bad debts, and slow growth in fees and commissions, The East African reports.

The banks collectively losses reached $11.2 million. This mainly refers to cash generated from trading in the first three months to March 31.

According to media reports, Equity Bank with operations in Tanzania, Uganda, Rwanda, South Sudan and the Democratic Republic of Congo marked a steep fall in net earnings. Its total net profits for the first quarter were estimated at $2.85 million down from $10 million in the same period last year.

KCB was second in line to record a decline with $5.9 million down from $8.92 million. Its additional profit fell by 33 percent. That said, Co-operative Bank Was $1.5 million down from $2.2 million in the same period last year. It accounted for more than 30 percent drop.

AIB Capital said in its report last week, “We expect a pick-up in provisioning going forward as the cost of risk, which decreased last year due to the adoption of IFRS9, normalises.”

Last year, the Central Bank of Kenya had favourably granted a small window for the banks to charge their “loan-loss provisions against the retained earnings in the balance sheet and not in their profit and loss accounts,” stated. This was to ensure the banks do not crumble with massive dip in profits.

However, with the beginning of 2019, the banks are expected to comply with the new accounting standards. This might hurt their earnings, media reports said.