NAIROBI –The Central Bank of Kenya ( CBK) in October posted a net surplus of Sh13.5 billion from Sh3.6 billion the previous financial year.

However, the bank of last resort’s operating expenses are expected to increase significantly in the 2014/15 financial year, according to a report by the Auditor General on CBK for the financial year ending June 30, 2014.

According to audited CBK financial statements for 2014, operating expenses increased to Sh12.2 billion from Sh9.4 billion. This was attributed to the write-off made on the cost of Sh1.2 billion currency. The cost of currency coins also increased by Sh780 million to Sh1.75 billion compared to Sh976 million last year.

Currency costs are expected to increase in the 2014/15 financial year, as the bank plans to issue new generation currency to comply with constitutional requirements. Article 231(4) of the Constitution states that all notes and coins shall bear only images that depict Kenya.

These images exclude portraits of any individual. This means CBK must print new notes as well as mint new coins to conform to the law. During the financial year ended June 30, 2014, the bank’s net interest income after impairment charge was Sh4.8 billion, up from Sh1.9 billion in 2013.

The increase was due to reduction in monetary policy expenses, attributed to the stance taken by the Monetary Policy Committee. The bank’s unrealised foreign exchange gains went up significantly to Sh14.7 billion from Sh5.6 billion the previous year due to increased foreign exchange reserves and a weakening shilling in the period under review.

Exchange rate Assets increased to Sh854.6 billion from Sh595.3 billion, attributed to receipts from the Diaspora and the $2 billion (Sh174 billion) Euro bond in June 2014 as well as movement in exchange rates.

Liabilities increased to Sh784.2 billion from Sh537.4 billion in 2013 due to higher liquidity as evidenced by higher deposits from banks and government.

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