The 2017 Annual Bank Supervision Report by Central Bank of Kenya (CBK) casts a spotlight on the changing fortunes of banks as they jostle for position in a competitive market.
The banking sector market share analysis has Kenya Commercial Bank (KCB) retaining its position posting a market share index of 14.4 per cent, followed by Co-operative with 9.93 per cent. Equity has 9.85 per cent, Stanchart 7.11 per cent, Diamond Trust Bank (DTB) 6.72 per cent, Barclays 6.57 per cent, Commercial Bank of Africa (CBA) 6.05 per cent and Stanbic's 5.62 per cent close the top Tier 1 Group.
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Co-operative Bank has risen to second position displacing Equity to third. Barclays has retreated from fourth position in 2016 to sixth in 2017. Both Stanchart and DTB have retained their steady climb to rank fourth and fifth respectively. It is not as yet apparent whether the loss of market share by Barclays has any connection with possible market jitters surrounding the change in ownership and rebranding currently underway.
The re-jigging of the pecking order essentially reflects the level of agility and resilience of respective banks in Kenya’s rather turbulent operating environment that banks had to contend with in the last two years.
The introduction of more stringent accounting guidelines under the IFRS 9 rules has intensified pressure on bank performance, not to mention the proposed higher taxation on bank profits and transactions.
The interest rate capping also dramatically cut operating margins especially for lenders previously enjoying big interest spreads. The extended electioneering period that was compounded with the unprecedented cancellation and a repeat of a presidential election caused much anxiety to the detriment of the economy.