BY ANTONY MUTUNGA
Financial institutions have started to see a glimpse of recovery in their books following a tough period as a result of the pandemic. In the year ending December 2022, banks listed on the Nairobi Securities Exchange such as KCB, NCBA, Absa, DTB, Equity, Stanbic, Housing Finance, Standard Chartered, I&M, and Co-operative Bank, managed a combined pre-tax profit of Sh213.3 billion, taking home 83.3% of the total profits recorded in the Kenyan banking sector.
Competition among the top commercial banks has also been high as KCB overtook Equity to become the largest lender in the country by asset size.
For the year ending December 2022, the lenders’ total assets stood at Sh1.55 trillion witnessing a major growth of 36.4% as compared to the period ending 2021 where its assets stood at Sh1.14 trillion.
Equity bank, on the other hand, saw its total assets grow by only a small margin from Sh1.30 trillion in 2021 to Sh1.45 trillion as at the end of 2022. Equity’s assets have increased in the first quarter of 2023 to reach Sh1.54 trillion, however, they still trail KCB’s number as at end of 2022. KCB’s growth can be attributed to growth of new business lines, accelerated digital transformation and aggressive expansion of foreign subsidiaries.
According to Andrew Wambari Kairu, KCB Group chairman, the bank has made significant investments in their regional expansion strategy such as their latest entry into Democratic Republic of Congo (DRC) through Trust Merchant Bank (TMB) bank.
“These investments are key to accelerating our future growth and commitment to delivering shareholder value,” Wambari said.
Despite the increase in total assets, the bank’s revenues trailed those of its rival as Equity recorded a profit before tax of Sh59.84 billion as compared to KCB’s Sh57.33 billion. The latter grew its revenue compared to the period ending 2021 whereby its revenue was Sh47.81 billion. This was the case even though, in 2022, its expenses rose from expenses in its acquisition in DRC.
The bank has highlighted expansion into the wider eastern Africa region offers an immense opportunity for new growth, a remark that has been championed by both the KCB chief executive, Paul Russo and Equity’s James Mwangi.
In terms of customer deposits KCB also came ahead recording Sh1.14 trillion as compared to Equity’s Sh1.05 trillion. With KCB joining the rank of those with a customer deposit base of over one trillion shillings, the two banks are the only ones to accomplish such a feat. Over to customer loans, the gap between the two gets even wider as KCB leads with Sh863.27 billion while Equity’s stands at Sh706.66 billion as at the end of 2022. As for the first quarter of 2023, Equity has seen its customer deposits stand at Sh1.11 trillion while its customer loans at Sh756.30 billion.
KCB also has the largest branch network in the region, with a total of 603 branches in the Eastern African region as well as 32.4 million customers. Equity bank, on other hand, reported a total number of 337 in 2021 at a time the Group CEO stated that moving forward branchless banking will be the new norm.
