Kenyan Listed Banking Sector Quarterly Earnings and Operating Metrics
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Banking Sector Growth Drivers....
Further Consolidation: Consolidation remains a key theme going forward with the current environment offering opportunities for
larger banks with a sufficient capital base to expand and take advantage of the market's low valuations, as well as further
consolidate out smaller and weaker banks. Bigger banks are also more profitable and have better deposit growth coupled with
cheaper cost of funds compared to smaller banks. As such, consolidation will help the smaller banks meet the minimum capital
requirement and also expand big bank's asset base
Regional Expansion: Majority of the bigger banks have continued to cushion over unsystematic risks specific to the local market
by expanding their operations into other African nations. Banks such as KCB and Equity Group have been leveraging on expansion.
which has largely contributed to their increased asset base as well as earnings growth. As aforementioned, KCB Group recently
announced the acquisition of Trust Merchant Bank (TMB) in DRC, while Equity Group is in the process of completing acquisition of
Spire Bank. As such, we expect to see continued expansion trend aimed at revenue optimization. Additionally, Ethiopian government
recently announced opening up of the financial sector to foreign investors, which provides a great opportunity for Kenyan banks to
expand their operations into the Ethiopian market
Cytonn
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