A recent report by Cytonn Investments has placed I&M Holdings Kenya and Co-operative Bank Kenya as the top financial institutions in the country.
Taking first place is I&M, in a consistent upward trend from being 2nd runners up in 2018 and 1st runners up at the end of 2019.
Co-op Bank’s ranking rose to second from third in the 2019 Financial Year (FY) with the improvement attributed to the Gross non-performing Loans (NPL). “Co-operative Bank of Kenya Ltd whose rank improved to Position 2 from Position 3 in FY’2019 mainly due to an improvement in the Gross NPL ratio to 10.8 pc in Q1’2020 from 11.2 pc in FY’2019, in turn, improving its franchise value score,” said Cytonn.
Kenya Commercial Bank(KCB) which was first in 2019 takes 2nd runners up with Equity settling in at the fourth place, the report by the investment manager shows.
Diamond Trust Bank emerged fifth in the comprehensive ranking.
Even with the global pandemic, due to Kenyan banks undertaking massive changes mostly credited to the diversification of income and help from other stakeholders like the Central Bank of Kenya (CBK), the report observed that Kenya’s banking sector had shown resilient performance.
For instance, the money lenders have embarked on capital conservation by suspending dividends paid out amid the tough conditions set by the pandemic. “Equity Group Holdings withdrew their recommendation to pay a first and final dividend of Kshs 2.5 per share for FY’2019 while Standard Chartered Bank announced the postponement of the proposed final dividend payments of Shs 15.0 per share for FY’2019,” reads the report by Cytonn.
However, the banks were also negatively affected by the pandemic, the report notes a decline in the quality of their loan books as a result of compliance with the new accounting rules known as IFRS 9.
“Asset quality deteriorated in Q1’2020 with the gross NPL ratio increasing by 0.9 per cent points to 11.3 per cent from 10.4 per cent in Q1’2019. This was high compared to the 5-year average of 8.5 per cent,” reads the report.
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