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Battle of The Banks: KCB vs Equity Bank vs CBA

Its a season like no other in the Kenyan Banking Industry. A few years ago, the banking sector in Kenya was flooded; now, its either you go big or get swallowed. The field continues to be tough especially for ‘small’ banks and with mobile banking growing, the future does not look very bright.

However, that does not mean the banking sector is on its knees. On the contrary, banks made a Sh152.3bn record Pre-tax profit in 2018 defying trends across the world. That means that they have now more than doubled their combined profits in under one decade, making them one of the most profitable sectors of the economy.

According to a 2018 report by London based Financial Times, three Kenyan Banks are among the World’s top 20 in terms of Returns on Assets (RoA). These 3 are Equity Bank which was ranked 11th on the returns list with a 5.3% RoA, KCB at 14th with a 4.5% RoA and Co-operative Bank at 17th with a 4.24% RoA.

With the merger between NIC bank and Kenyatta owned CBA Bank, Co-operative Bank is no longer the third largest bank in Kenya in terms of assets. For a long time CBA has been trying to position itself as a leading bank in Africa and the merger is strategic to its positioning.

KCB Vs Equity Bank

The biggest battle for the leader is however between KCB and Equity Bank. KCB is the largest and most profitable bank in Kenya at the moment but Equity is not asleep. This year both banks have not only acquired other struggling banks, they have also ventured in new countries.

NBK
KCB set to acquire NBK

KCB has set its eyes on The National Bank (NBK) and hopes that the deal will go through. It also poised to takeover the collapsed Imperial bank after paying sh10 for the five Imperial Bank branches. The bank has subsidiaries in Rwanda, Burundi, South Sudan, Tanzania and is eyeing the Ethiopian market where it has a representative Office.

KCB is also set to buy out some banks in Rwanda and DRC in a plan that seeks to solidify its top position in East and Central Africa. The CEO also recently said they are looking to open a representative office in China to take advantage of the growing Chinese trade deals with Africa countries. Apart from that, KCB has also inked a deal with Morocco’s largest bank to facilitate cross-boarder trade.

On its part Equity has also gone on a shopping spree and is set to acquire stakes in banks in Rwanda, Zambia, Mozambique and Tanzania. It currently operates in Tanzania, Uganda, Rwanda, Burundi, DRC and South Sudan. The bank is also eyeing 100 million people Ethiopian market and has sent a request seeking permission to operate in the country.

Equity is also going big on the digital platform with their online money transfer dabbed Equity Direct. The Bank CEO James Mwangi said that they are targeting the UK market as its one of the high remittance corridor.

While the growth in market and number size is good news for the Government and the shareholders, the hope is that the bubble won’t burst. Bad loans from their subsidiaries especially in Tanzania have increased offering a glimpse of a harsh environment outside Kenya.

Whether their strategies of going all out in the quest to be at the top yields fruits, our hope is that the banking sector in Kenya continues to grow.

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