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Banking Industry Kenya

The Banking Industry in Kenya 2021

Gary Phillips | Kenya | 18 November 2021

The Banking Industry in Kenya 2019

Louise Mitchell | Kenya | 13 November 2019

The Banking Industry in Kenya 2018

Louise Mitchell | Kenya | 12 January 2018

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Report Coverage

This report covers the Kenyan banking industry, focusing on commercial banks and also including the central bank, microfinance and mutual funds such as local credit and savings unions and community-based financial services associations. It includes comprehensive information on the size and state of the industry, the performance and developments of major industry players, corporate actions and industry developments. There are profiles of 56 companies including notable commercial banks such as Standard Chartered, Stanbic, Equity Bank and KCB Group, smaller banks including Paramount and Middle East Bank and microfinance banks such as Faulu and Muungano.

Introduction

This report covers the Kenyan banking industry, focusing on commercial banks and also including the central bank, microfinance and mutual funds such as local credit and savings unions and community-based financial services associations. The Kenyan banking sector is a very important part of the domestic economy, contributing 5% to the country’s GDP (Q1 2021). It has a total asset base of around US$500m and employs over 32,000 people. Most of the assets are held by the country’s 39 commercial banks, and within commercial banking, assets are concentrated within the 10 listed companies, half of which are foreign-owned banks. The Kenyan banking industry is widely held to be overbanked, and large banks are being driven by these intensely competitive and low-margin conditions to consolidate the domestic sector through mergers and acquisitions while also intensifying their drive to become fully regionalised banks. Disruptive mobile money platforms, led by Safaricom’s M-Pesa, emerged as significant competitors to commercial banks at a time when a government-imposed interest rate cap curbed banking loans to small businesses and households, which make the up the majority of the Kenyan retail finance market. Since 2016, the widespread adoption of digital banking platforms by commercial banks has provided them with a restructured business model of expansion at a much lower cost. The trends, structural vulnerabilities and resilience which characterised the Kenyan banking industry were amplified during the pandemic. Facing credit risks from a rapid increase in non-performing loans, the banks restructured loans – at significant cost – while aggressively increasing their capital and liquidity buffers, particularly by purchasing government securities and withholding cash dividend payments to shareholders. Smaller banks faired less successfully in this response. After the loan restructuring period and the subsequent restoration of net interest revenue and profitability, well-capitalised large commercial banks are expected to continue to consolidate the domestic market, expand into the region and pursue digital banking to lower costs and win back small business and household customers lost to non-bank competitors in recent years.

Strengths

• Agent banking is facilitating growth in financial inclusion.
• Competition is increasing with telecoms and fintech companies entering the market.
• Digital banking continues to improve financial inclusion.
• Diversification into digital banking channels is driving down operating costs of commercial banks.
• Economic growth will lead to improved demand for credit and strengthen banks’ assets.
• Established and new players embrace innovation, making Kenya a world leader in mobile money and banking technology.
• Foreign investment in local banks.
• Government and donor support for improvement of access of small and medium enterprises to finance.
• Local banks are present in and continue to expand into the East African Community and beyond.
• Training programmes are provided for SMEs to improve financial literacy.

Weaknesses

• The banking industry is highly concentrated, with the listed banks dominating the market.
• The large number of players make the sector overbanked.

Opportunities

• , The strong presence of foreign banks gives local banks the opportunity to partner or merge and build capacity.
• Consolidation will strengthen the performance of the large commercial banks.
• Expansion by commercial banks into the East African region will strengthen their operations and provide a footprint making Kenya a central hub for banking in the region.

Threats

• Cybercrime threatens the stability of banking services.
• Increased technology adoption by players could lead to further branch closures and retrenchments.
• Increasing number of non-performing loans.
• Terrorist activities in Kenya and neighbouring countries are leading to reduced capacity of commercial banks when they have to close down branches.

Outlook

A well-capitalised commercial banking industry showed resilience during the pandemic in 2020 and quickly bounced back to restore profitability and net interest revenue growth. However, the continued deterioration of asset quality and the ongoing economic threat from COVID-19 because of the slow pace of vaccination means that the industry could still face rising levels of non-performing loans and credit loss. Profitability in microfinance banking is a more acute concern, and the limited ability of the Kenyan government to provide stimulus and protection to SMEs because of its high debt levels and high debt servicing requirements casts a shadow over the outlook of SME-focused banks. Positive developments in the diversification of revenue streams through digital, mobile, bancassurance and other non-funded income, consolidation in the domestic market and expansion into the regional market will go some way to sustain the banks through these uncertainties.

Read More..
The Banking Industry in Kenya 2021

Full Report

R 6 500.00(ZAR) estimated $340.92 (USD)*

Industry Landscape

R 4 550.00(ZAR) estimated $ 238.64 (USD)*

Historical Reports

The Banking Industry in Kenya 2019-11-13

R 1 900.00(ZAR) estimated $99.65 (USD)*

View Report Add to Cart

The Banking Industry in Kenya 2018-01-12

R 1 900.00(ZAR) estimated $99.65 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. COUNTRY PROFILE 1
2.1. Geographic Position 8
3. DESCRIPTION OF THE INDUSTRY 10
3.1. Industry Value Chain 16
3.2. Size of the Industry 17
3.3. Key Success Factors and Pain Points 33
4. LOCAL 34
4.1. Key Trends 34
4.2. Notable Players 39
4.3. Corporate Actions 49
4.4. Regulations 51
4.5. Enterprise Development and Social Development 54
5. AFRICA 57
6. INTERNATIONAL 59
7. INFLUENCING FACTORS 61
7.1. COVID-19 61
7.2. Economic Environment 62
7.3. Labour 64
7.4. Technology, R&D and Innovation 66
7.5. Input Costs 68
7.6. Kenya’s Credit Rating 70
8. COMPETITIVE ENVIRONMENT 72
8.1. Competition 72
8.2. Barriers to Entry 73
9. SWOT ANALYSIS 74
10. OUTLOOK 75
11. INDUSTRY ASSOCIATIONS 76
12. REFERENCES 76
12.1. Publications 76
12.2. Websites 77
COMPANY PROFILES 84
Absa Bank Kenya PLC 84
Access Bank (Kenya) PLC 92
African Banking Corporation Ltd 95
Bank of Africa Kenya Ltd 98
Bank of Baroda (Kenya) Ltd 101
Bank of India Kenya (Kenya branch of Bank of India) 104
Caritas Microfinance Bank Ltd 106
Central Bank of Kenya 108
Century Microfinance Bank Ltd 111
Choice Microfinance Bank Ltd 113
Citibank Kenya (Kenya branch of Citibank N.A.) 115
Co-operative Bank of Kenya Ltd (The) 117
Consolidated Bank of Kenya Ltd 124
Credit Bank PLC 127
Daraja Microfinance Bank Ltd 130
Development Bank of Kenya Ltd 131
Diamond Trust Bank Kenya Ltd 133
DIB Bank Kenya Ltd 138
Ecobank Kenya Ltd 140
Equity Bank (Kenya) Ltd 143
Family Bank Ltd 145
Faulu Microfinance Bank Ltd 151
First Community Bank Ltd 154
Guaranty Trust Bank (Kenya) Ltd 157
Guardian Bank Ltd 160
Gulf African Bank Ltd 163
Habib Bank Kenya (Kenya branch of Habib Bank AG Zurich) 166
HFC Ltd 168
I&M Bank Ltd 170
KCB Group PLC 175
Kenya Women Microfinance Bank PLC 179
KEY Microfinance Bank PLC 183
Kingdom Bank Ltd 185
M Oriental Bank Ltd 188
Maisha Microfinance Bank Ltd 191
Mayfair CIB Bank Ltd 193
Middle East Bank Kenya Ltd 196
Muungano Microfinance Bank PLC 199
NCBA Group PLC 201
Paramount Bank Ltd 205
Prime Bank Ltd 207
Rafiki Microfinance Bank Ltd 210
RentWorks East Africa Ltd 212
SBM Bank (Kenya) Ltd 213
Sidian Bank Ltd 216
Simba Corporation Ltd 219
SMEP Microfinance Bank Ltd 222
Spire Bank Ltd 225
Stanbic Bank Kenya Ltd 227
Standard Chartered Bank Kenya Ltd 231
Sumac Microfinance Bank Ltd 236
U & I Microfinance Bank Ltd 238
UBA Kenya Bank Ltd 240
Uwezo Microfinance Bank Ltd 242
Vehicle and Equipment Leasing Ltd 244
Victoria Commercial Bank Ltd 246

Report Coverage

The report on the Kenyan banking industry covers deposit-taking institutions which include other credit granting, lease financing, and loyalty and reward programmes, as well as central banking. The report includes information on the size and state of the industry, its major players and specific areas of interest such as mobile and Islamic banking. There are profiles of 37 companies including major players such as Equity Bank and the Co-operative Bank of Kenya and Barclays, which is set to complete its rebranding to Absa by 2020. Profiles also include those of Key Microfinance Bank, which changed its name from Remu Microfinance Bank, and international banks Citibank and Bank of India.

Introduction

The report on the Kenyan banking industry covers deposit-taking institutions which include other credit granting, lease financing, and loyalty and reward programmes, as well as central banking. Kenya’s financial sector is well developed although analysts view the country as overbanked with 40 registered banks. According to official data, total assets grew by 8% to KSh4.27-trillion in 2018 from KSh3.95-trillion in 2017. The market is highly concentrated with the 12 listed commercial banks owning 89% of the total assets in 2018.

Strengths

• Agent banking is facilitating growth in financial inclusion.
• Competition is increasing with telcos and fintechs entering the market.
• Digital banking continues to improve financial inclusion.
• Diversification into digital banking channels is driving down operating costs of commercial banks.
• Economic growth will lead to improved demand for credit and strengthen banks’ assets.
• Established and new players in the sector embrace innovation, making Kenya a world leader in mobile money and banking technology.
• Foreign investment in local banks.
• Government and donor support for improvement of access of small and medium enterprises to finance.
• Local banks are present in and continue to expand into the East African Community and beyond.
• Loyalty and rewards sub-sector is growing with new loyalty programmes being launched.
• Training programmes are provided for SMEs to

Weaknesses

• Job losses at commercial banks due to increasing competition from mobile money services.
• The banking sector is highly concentrated, with the listed banks dominating the market.
• The dominant player in mobile money is preventing fair competition which leads to high prices.
• The large number of players make the sector overbanked.

Opportunities

• Barriers to lease financing to small and medium enterprises might lessen following the investigation by the competition authority.
• Consolidation in the sector will strengthen the performance of the large commercial banks.
• Foreign commercial banks are entering the market, giving local banks the opportunity to partner or merge and build capacity.
• Mortgage loans are expected to increase when banks start to receive loans from the new mortgage refinance company.

Threats

• Cybercrime threatens the stability of banking services.
• Increased technology adoption by players could lead to further branch closures and retrenchments.
• Increasing number of non-performing loans.
• Terrorist activities in Kenya and neighbouring countries are leading to reduced capacity of commercial banks when they have to close down branches.
• The weak corporate bonds market is a contributing factor to the default of banks in financial distress.

Outlook

The Kenya Bankers Association expects partnerships between banks and non-bank players, notably fintechs and mobile network operators, to continue to shape market power and competition. Industry participants believe consolidation could continue as banks seek to improve liquidity and re-engineer their business and systems to absorb adverse shocks. Increased channel diversification, which is likely to help banks to continue improving operational efficiency, will lead to alignment of staff to operational needs. Compliance with financial sector regulators will be a driving force for investments by banks in financial resources, staff and technology.

Read More..
The Banking Industry in Kenya 2019

Full Report

R 1 900.00(ZAR) estimated $99.65 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 69.76 (USD)*

Historical Reports

The Banking Industry in Kenya 2021-11-18

R 6 500.00(ZAR) estimated $340.92 (USD)*

View Report Add to Cart

The Banking Industry in Kenya 2018-01-12

R 1 900.00(ZAR) estimated $99.65 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. COUNTRY INFORMATION 1
2.1. Geographic Position 2
3. DESCRIPTION OF THE INDUSTRY 3
3.1. Industry Value Chain 8
4. SIZE OF THE INDUSTRY 8
5. STATE OF THE INDUSTRY 12
5.1. Local 12
5.1.1. Corporate Actions 17
5.1.2. Regulations 19
5.1.3. Enterprise Development and Social Economic Development 22
5.2. Continental 23
5.3. International 30
6. INFLUENCING FACTORS 32
6.1. Economic Environment 32
6.2. Financial Inclusion 33
6.3. Operating Costs 34
6.4. Information Technology (IT), Research and Development (R&D) and Innovation 35
6.5. Labour 36
6.6. Cybercrime and Fraud 37
7. COMPETITION 38
7.1. Barriers to Entry 39
8. SWOT ANALYSIS 39
9. OUTLOOK 41
10. INDUSTRY ASSOCIATIONS 41
11. REFERENCES 42
11.1. Publications 42
11.2. Websites 42
APPENDIX 1 44
Summary of Notable Players 44
COMPANY PROFILES 48
AFRICAN BANKING CORPORATION LTD 48
BANK OF AFRICA KENYA LTD 51
BANK OF BARODA (KENYA) LTD 54
BANK OF INDIA 57
BARCLAYS BANK OF KENYA LTD 61
CARITAS MICROFINANCE BANK LTD 69
CENTRAL BANK OF KENYA 71
CITIBANK N.A. 74
CO-OPERATIVE BANK OF KENYA LTD (THE) 77
COMMERCIAL BANK OF AFRICA LTD 83
DIAMOND TRUST BANK KENYA LTD 87
ECOBANK KENYA LTD 92
EQUITY BANK (KENYA) LTD 95
FAMILY BANK LTD 97
FAULU MICROFINANCE BANK LTD 103
GUARANTY TRUST BANK KENYA LTD 105
GULF AFRICAN BANK LTD 108
HFC LTD 111
I&M BANK LTD 113
KCB GROUP PLC 117
KENYA WOMEN MICROFINANCE BANK PLC 121
KEY MICROFINANCE BANK PLC 125
NATIONAL BANK OF KENYA LTD 127
NIC GROUP PLC 133
PRIME BANK LTD 138
RENTWORKS EAST AFRICA LTD 142
SBM BANK (KENYA) LTD 143
SIDIAN BANK LTD 146
SIMBA CORPORATION LTD 149
SMEP MICROFINANCE BANK LTD 152
STANBIC BANK KENYA LTD 155
STANDARD CHARTERED BANK KENYA LTD 159
SUMAC MICROFINANCE BANK LTD 164
UBA KENYA BANK LTD 167
UWEZO MICROFINANCE BANK LTD 169
VEHICLE AND EQUIPMENT LEASING LTD 171
VICTORIA COMMERCIAL BANK LTD 173

Report Coverage

The detailed report on the Kenyan banking sector describes the current market, the latest regulatory developments and discusses factors influencing the success of the sector. The report profiles 34 companies active in the sector, including the five leading banks, Equity Group, Kenya Commercial Bank (KCB), The Co-operative Bank of Kenya, Standard Chartered Bank and Barclays Bank of Kenya. Also profiled are international banks, Bank of India and Citibank NA.

Introduction

The report on the Kenyan banking industry covers deposit-taking institutions which include other credit granting, lease financing, and loyalty and reward programmes. Central banking is included. Kenya’s financial sector is well developed with the banking sub-sector accounting for more than 60% of total assets in the financial services sector from January 2016 to March 2017. In 2016 the financial and insurance sector contributed 7% to GDP. Economic and regulatory challenges are reflected in the decline in growth of the financial services sector to 4.3% in the second quarter of 2017 compared to 8.1% in the same period in 2016. Analysts believe that the financial services system in Kenya could be jeopardised if fraud allegations against officials of the Central Bank of Kenya are substantiated.

Strengths

• Agent banking is facilitating growth in financial inclusion.
• Competition is increasing with telcos and fintechs entering the market.
• Established and new players in the sector embrace innovation making Kenya a world leader in mobile money and banking technology.
• Local banks are present in and continue to expand into the EAC and beyond.
• Loyalty and rewards sub-sector is growing with new loyalty programmes being launched.
• Mobile penetration of 96% is supporting the diversity and technological adoption of the banking industry which is improving financial inclusion.
• The Competition Authority of Kenya is aiming to protect consumers by keeping prices of dominant players in check.
• Training programmes are initiated for MSMEs to improve financial literacy.

Weaknesses

• Investment by commercial banks in technology is increasing operating costs which eats into margins and leads to retrenchments.
• Regional disparities are high, as relatively little geographic dispersion has taken place in the northern regions and the largely unbanked rural population has limited access to financial services.
• The banking sector is highly concentrated, with five players dominating the market.

Opportunities

• Data services represent a potentially important tool for deepening financial inclusion.
• Overseas commercial banks are entering the market giving local banks the opportunity to partner or merge and build capacity.
• The mobile channel holds opportunities for retailers to expand their customer base, thus increasing micro-loans.
• The moratorium on the licensing of new banks was lifted.
• The new Islamic bank will spur growth in this sub-sector as will Government’s imminent approval of Sukuk bonds as an alternative source of financing development projects.

Threats

• Cybercrime threatens the stability of banking services.
• Fraud in the CBK and commercial banks.
• Government’s budget deficit is impacting on availability of funding for development projects which is a source of deposit-taking for commercial banks.
• Increased technology adoption by players could lead to further branch closures and retrenchments.
• Increasing number of non-performing loans resulting from deteriorating macroeconomic conditions.
• Interest rates that were capped are resulting to a drop in profits of commercial banks and fewer customers for Micro Finance Institutions.
• Rising CPI is cutting consumers’ spending power, leading to a slowdown in credit demand, or an increase in bad debt.
• Rising operating costs are putting strain on margins which leads to underperformance.
• Terrorist activities in Kenya and neighbouring countries are leading to reduced capacity of commercial banks when

Outlook

Industry participants believe consolidation could increase as banks seek to shore up capital, re-engineer their business and develop systems to absorb adverse shocks. Kenya’s rate cap on loans is likely to impact the profitability of banks in the short-term as banks are forced to lend at lower rates. Over the longer term, however, banks are likely to adjust the supply of credit and reduce lending to consumers they deem unprofitable. The slowdown in lending is expected to continue to weigh on earnings for the rest of the year, according to Abizer Sharafali, a senior analyst at ApexAfrica Capital Ltd. in Nairobi. “If you look at the whole year, 2017 will be down significantly compared to 2016 but might pick up in 2018,” he said. Nielsen East Africa MD Jacqueline Nyanjom commented on the utilisation of mobile money, highlighting how statistics indicate the enormous potential for growth in this sector of the industry.

Read More..
The Banking Industry in Kenya 2018

Full Report

R 1 900.00(ZAR) estimated $99.65 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 69.76 (USD)*

Historical Reports

The Banking Industry in Kenya 2021-11-18

R 6 500.00(ZAR) estimated $340.92 (USD)*

View Report Add to Cart

The Banking Industry in Kenya 2019-11-13

R 1 900.00(ZAR) estimated $99.65 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. COUNTRY INFORMATION 1
2.1. Geographic Position 2
3. DESCRIPTION OF THE INDUSTRY 3
3.1. Industry Value Chain 7
4. SIZE OF THE INDUSTRY 8
5. STATE OF THE INDUSTRY 18
5.1. Local 18
5.1.1. Corporate Actions 26
5.1.2. Regulations 26
5.1.3. Enterprise Development and Social Economic Development 28
5.2. Continental 30
5.3. International 33
6. INFLUENCING FACTORS 34
6.1. Economic Environment 34
6.2. Terrorism 35
6.3. Financial Inclusion 35
6.4. Rising Operating Costs 37
6.5. Information Technology, Research and Development (R&D) and Innovation 37
6.6. Labour 39
6.7. Cybercrime and Fraud 41
7. COMPETITION 42
7.1. Barriers to Entry 43
8. SWOT ANALYSIS 43
9. OUTLOOK 45
10. INDUSTRY ASSOCIATIONS 45
11. REFERENCES 46
11.1. Publications 46
11.2. Websites 47
APPENDIX 1 48
Current Digital Credit Products in Kenya 48
COMPANY PROFILES 50
AFRICAN BANKING CORPORATION LTD 50
BANK OF AFRICA KENYA LTD 53
BANK OF BARODA (KENYA) LTD 56
BANK OF INDIA 59
BARCLAYS BANK OF KENYA LTD 63
CARITAS MICROFINANCE BANK LTD 70
CENTRAL BANK OF KENYA 72
CITIBANK NA 75
CO-OPERATIVE BANK OF KENYA LTD (THE) 78
COMMERCIAL BANK OF AFRICA LTD 84
DIAMOND TRUST BANK KENYA LTD 88
ECOBANK KENYA LTD 93
EQUITY BANK (KENYA) LTD 96
FAMILY BANK LTD 98
FAULU MICROFINANCE BANK LTD 104
GUARANTY TRUST BANK KENYA LTD 106
GULF AFRICAN BANK LTD 109
HFC LTD 112
I&M BANK LTD 114
KCB GROUP LTD 118
KENYA WOMEN MICROFINANCE BANK LTD 121
NATIONAL BANK OF KENYA LTD 124
NIC BANK LTD 130
PRIME BANK LTD 135
RAFIKI MICROFINANCE BANK LTD 138
REMU MICROFINANCE BANK LTD 141
SIDIAN BANK LTD 143
SMEP MICROFINANCE BANK LTD 145
STANBIC BANK LTD 147
STANDARD CHARTERED BANK KENYA LTD 150
SUMAC MICROFINANCE BANK LTD 155
UBA KENYA BANK LTD 157
UWEZO MICROFINANCE BANK LTD 159
VICTORIA COMMERCIAL BANK LTD 160