Co-operative Bank of Kenya and NCBA Group have joined KCB Group and Equity Group in the list of top 25 largest banks in Africa as Kenyan lenders recorded the fastest growth in the continent.
The Financial Times’ latest listing of the World’s top 1,000 banks shows that KCB was the fastest growing lender in Africa with an expansion of 54.9 percent which saw it rise in rank to 13th largest bank in the continent from last year’s ranking of 21st.
The four Kenyan banks were the top fastest growing in the continent with KCB leading the pack followed by Co-op Bank which grew by 39.2 percent, Equity at 38.4 percent and NCBA, 32.2 percent.
Equity was the second highest ranked Kenyan bank at position 15 in Africa, while Co-operative Bank came in at 22 and NCBA, 25.
Globally KCB Group ranked at 572 while Equity was 590, Co-op Bank (864) and NCBA (924) as per a listing of the world’s largest banks that is published by FT’s the Banker magazine.
The Banker ranks the world’s top lenders based on a number of parameters including the size of shareholders own capital (tier 1 capital), profitability, operational efficiency, asset quality, liquidity and return on risk.
Co-op Bank with a return on assets of 3.43 percent was ranked fifth in utilising its balance sheet. The fast growth by Kenyan banks saw them, for the first time, outrank West African lenders which have subsidiaries operating in the local market.
KCB and Equity ranked higher than Togo’s Ecobank Transnational which has a presence in 33 countries and a capital base of Sh3.7 trillion.
They were also ranked above Nigerian banks –Access Bank, Guaranty Bank and United Bank of Africa which have larger balance sheets. Higher ranking by the Kenyan banks compared to the more muscled West African lenders points to opportunity in markets where they have presence.
The Kenyan lenders in the list have regional subsidiaries whose contributions to their performance have been growing by the year.
“Meanwhile, several Nigerian banks have lost ground in the regional top 25. Zenith Bank, with $2bn in Tier 1 capital, falls two places to 14th position, while Access Bank slips from 14th to 18th. Similarly, United Bank for Africa drops four places to 20th in the current table,” said the publication.
Zenith Bank, which has assets valued at Sh2.52 trillion, is also eyeing the Kenyan market through an acquisition.
Four of the banks ranked among the top ten lenders have a presence in Kenya underlining the lure of the Kenyan market as a launch pad into the East African market and the competitiveness of its banking sector.
Standard Bank Group, which retained its ranking as the top bank in the country, has a presence in the country through its subsidiary Stanbic Bank. Others are South African Absa Group which ranked third, Moroccan Bank of Africa (7th) and CIB Egypt (8th).
Kenyan banks are yet to expand physical operations to West African nations. NCBA offers digital loans in Côte d'Ivoire.
The Eastern African nations where they have presence have been cash cows owing to their low financial inclusion that has allowed Kenyan banks to exercise technological advantage to scale their operations.
The markets such as Democratic Republic of Congo and South Sudan are considered to be volatile, limiting the number of entrants and allowing for wider margins to compensate for the risk.
