The profit rose to 22.4 billion shillings ($221 million) from 20.7 billion a year earlier, while interest income rose 9 percent to 38.5 billion shillings, CEO James Mwangi told an investor briefing.

The lender also operates in Uganda, Tanzania, South Sudan, Rwanda and the Democratic Republic of the Congo.

Mwangi said the bank had maintained an "agile and liquid" balance sheet which it had used to "take advantage of emerging opportunities at lower operational costs".

He said interest rate capping continues to hinder credit flows and frustrate the private sector.

Kenya started capping commercial banks' lending rates in September 2016, with authorities saying they wanted to help small traders access capital at affordable rates.

But the move has had the opposite effect, with banks saying they cannot properly price risk to small and medium enterprises (SMEs) while the cap is in place.

($1 = 101.3500 Kenyan shillings)

(Reporting by Omar Mohammed; editing by Elias Biryabarema and Jason Neely)