The global financial market faced turbulent waves, but Kenya’s top banks managed to increase their primary funding, outperforming more than half of their continental peers, according to the latest report by the Banker.
Cooperative Bank Rises in Rankings
In the annual ranking for 2023, Co-op Bank advanced six places to secure the 30th position, with its Tier I capital growing by 6.3% to $753 million or Sh110.7 billion.
Tier I capital, encompassing shareholders’ equity and retained earnings, is a crucial metric indicating a bank’s financial stability.
Co-op Bank’s Steady Growth and Market Dominance
Co-op Bank, recently surpassing KCB Group as the second most traded counter at the Nairobi Securities Exchange (NSE), attributes its stability to a broad growth strategy and strong ties with the cooperative movement, boasting 15 million Sacco members.
Equity Bank Group Leads with Impressive Growth
Equity Bank Group, experiencing a remarkable 19.7% growth in Tier I capital, emerged as Kenya’s most steadfast bank, securing the 20th position continent-wide.
Its Tier I capital surged to $1.44 billion (Sh210 billion) in the fiscal year ending December 31, 2022.
Kenya’s Top 100 Banks: A Snapshot
Among other notable local banks in the top 100 list were KCB, NCBA, and DTB Bank. KCB Group, despite a modest 1.89% growth in Tier I capital, maintained its position at 21st.
KCB also retained its status as the largest lender in Kenya in terms of total assets, reaching an impressive Sh1.86 trillion in the first half of 2023, despite a net profit closure at Sh16.1 billion.
Continental Overview and Challenges
While many African banks experienced declines in Tier I capital due to weak currencies, the report highlighted a return to profitability as the impact of the Covid-19 pandemic subsided.
However, high-interest rates and depreciating currencies remained significant challenges for the banking sector, both in Kenya and across the continent.
Egyptian Banks Face Crisis, Nedbank Rises
Egyptian banks suffered a sharp setback in 2022 amid a deepening financial crisis, leading to a decline in Tier I capital positions.
Meanwhile, South Africa’s Nedbank managed to reclaim the fourth position with a 0.6% gain in its Tier I capital, surpassing National Bank of Egypt, which, along with Banque Misr, was omitted from the ranking due to a lack of audited end-of-year data for 2022.
Outlook for African Banks
The report projected restrained growth for major African banks, emphasizing the challenges posed by high-interest rates and weak currencies.
In Kenya, despite the Central Bank’s efforts to maintain the base lending rate, the average lending rate surged, contributing to increased loan defaults.
Additionally, the weakening shilling added to the economic concerns, further impacting the banking sector.
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]