Equity in league of 25 biggest African banks on fast growth
What you need to know:
Equity Bank posted a 29.8 per cent growth in core capital last year to Sh65.5 billion making it the 25th largest bank in Africa and position 835 in the world.
Kenyan lenders have been able to squeeze higher returns from their assets owing to introduction of cost-effective products such as agency and mobile banking.
Equity Bank has been ranked the fastest-growing large bank in Africa, which has helped it join the league of 25 largest lenders on the continent.
The lender posted a 29.8 per cent growth in core capital last year to Sh65.5 billion making it the 25th largest bank in Africa and position 835 in the world.
Co-operative Bank was the third highest mover in Africa following a 10.9 per cent growth which saw it jump to position 961 globally up from 981 last year.
KCB, the largest bank in the country by asset base and number 808 in the world, now ranks 24th in Africa following a 2.2 per cent growth in tier 1 capital, which is used as the ranking standard.
“The relative strength of this performance can in part be attributed to the performance of the Kenyan shilling in 2015, which declined modestly against the US dollar relative to many other African currencies,” said The Banker, a publication of Financial Times, which ranks the Top 1,000 banks globally.
Kenyan lenders have been able to squeeze higher returns from their assets owing to introduction of cost-effective products such as agency and mobile banking.
Equity offered the second best return on assets in Africa (eighth globally) of 5.6 per cent while KCB ranked fourth in the continent at 4.76 per cent.
The two are leading in agency and mobile banking in the country with both channels doing more transactions than bank clerks and automated teller machines (ATMs).
The technological gains are yet to translate to cheaper services to customers, allowing the lenders to book massive profits and expand the gap between large and small banks in the country.
KCB could acquire Chase Bank underlining the financial muscle of the top banks.
Equity’s management has rule out acquisition of a bank in the local market arguing that its annual growth was the size of a mid-sized bank though.
The rise of the Kenyan banks on the continental scene follows their aggressive geographical expansion as they bid to protect the East and Central Africa territory from their larger Nigerian and South African rivals.
Last year KCB opened a representative office in Ethiopia pushing its regional presence to seven countries including Uganda, Tanzania, Rwanda, Burundi and South Sudan.
Equity has presence in six States following its recent entry in the Democratic Republic of Congo through the acquisition of ProCredit Bank.
The country’s largest lender by customer base also has presence in Uganda, Tanzania, Rwanda and South Sudan. Equity management disclosed plans to expand into Ethiopia, Burundi, Mozambique, Malawi, Zambia and Zimbabwe in the next five years before turning attention to West Africa.
The banks are using operations in the less competitive regional markets to keep their profit growth high, which is paying dividends as they are rising in the global ladder.
