The banking sector in Kenya hit Sh6 trillion in asset value by December last year, with two lenders ascending to Sh1 trillion banks in East Africa.
The Bank Supervision Annual Report 2021 released by the Central Bank of Kenya (CBK)on Friday attributes this to the growth in investments in government securities and loans and advances.
”The sector’s asset base grew by 11 per cent to approximately Sh6 trillion in 2021 from Sh5.4 trillion in 2020. The sector recorded strong capitalization levels as a result of retention of profits and additional capital injections,” CBK said.
The sector’s capital adequacy ratio stood at 19.5 per cent in 2021, an increase from 19 percent in 2020, with gross earnings rising 75.7 per cent to Sh197 billion from Sh112.1 billion the previous year.
The increase in profitability was attributed to a higher increase in income of 9.3 per cent as compared to a decrease in expenses by 6.7 per cent.
The regulator projects the sector to remain resilient in 2022, as banks continue supporting the post-covid economic recovery.
Equity Bank Group was the first to cross the Sh1 trillion rubicon, after the acquisition and integration of its business with Banque Commerciale Du Congo (BCDC) in December 2020, eclipsing KCB Group as the largest bank in Kenya in terms of asset value.
In recently released Q1, 2022 financial results, the bank’s asset value was captured at Sh1.27 trillion having grown by 19 per cent from Sh1.06 trillion same period last year.
It is followed closely by KCB Group whose balance sheet expanded by 19.3 per cent to Sh1.2 trillion, driven by organic growth across the business and the consolidation of BPR.
Co-op Bank which acquired Jamii Bora two years ago and renamed it Kingdom Bank saw its total assets grow to Sh597.0 billion in the first three months of this year, an eight per cent growth from Sh552.9 billion in the same period last year.
According to the report, the country has 20 operating local private commercial banks and two local public commercial banks, which accounted for 68.3 per cent and 0.5 per cent of total net assets respectively.
A total of 17 operating commercial banks were foreign-owned and accounted for 31.2 per cent of the sector’s assets.
The number of bank branches decreased to 1,459 during the review period compared to 1,502 in 2020, translating to a decrease of 43 branches or 2.86 per cent.
Nairobi County registered the highest decrease in the number of branches by 33 branches.
A total of 11 counties registered an increase of 19 bank branches while 14 counties registered a decrease of 62 bank branches. In 22 counties, there was no change in bank branches.
The decrease in bank branches is mainly attributed to the closure of branches by some commercial banks due to the adoption of alternative delivery channels including agency banking, mobile phone banking, and internet banking.
According to the report, there are nine large banks in the country with a combined market share of 74.76 per cent , eight medium banks with a market share of 16.41 per cent and 22 small banks accounting for 8.82 per cent of the market share.
Commercial banks are classified into three peer groups using a weighted composite index. The index comprises net assets, customer deposits, capital and reserves, number of deposit accounts and number of loan accounts.
A bank with a weighted composite index of five per cent and above is classified as a large bank. A medium bank has a weighted composite index of between one per cent and five per cent while a small bank has a weighted composite index of less than one per cent.