By James Anyanzwa
The banking sector reaped Sh74.3 billion in profit last year with six large banks controlling a massive 63 per cent (Sh46.8 billion) of the total net earnings.
The big banks also commanded 56 per cent of total assets, 55 per cent of customer deposits, and 57 per cent of the total capital and reserves, according to Central Bank’s latest Bank Supervision report for 2010.
According to the report, each of these large banks — Barclays Bank, CFC Stanbic Bank, Cooperative Bank Equity Bank, Kenya Commercial Bank and Standard Chartered Bank Kenya Ltd — also control more than five per cent of the market share.
The banking sector’s profit before tax (PBT) rose significantly by 51.9 per cent to Sh74.3 billion in December 2010 from Sh48.9 billion in December 2009, buoyed by higher levels of revenue inflows from the growth in credit portfolio, and investment in Government securities.
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Total income increased 22.7 per cent to settle at Sh211.7 billion from Sh172.5 billion, while the sector’s expenses grew 11.3 per cent to Sh137.5 billion from Sh123.5 billion as a result of an increase in salaries and wages. However, interest expenses on deposits dropped to Sh33.8 billion from Sh35.1 billion due to lower deposit interest rates in 2010.
The remarkable performance was also underpinned by the recovery of both global and domestic economy, with the latter growing by 5.6 per cent in 2010 from a low of 2.6 per cent in 2009.
According to the report only four commercial banks failed to report profit. Of the four, three are relatively new institutions, which reported losses.
The sector’s asset base grew by 24.4 per cent to Sh1.68 trillion from Sh1.35 trillion in the previous year.
The number of loan accounts jumped to 1.74 million from 1.67 million, while the number of deposit accounts increased 47 per cent from 8.7 million to 12.8 million in a similar period.
CBK’s Bank Supervision Annual Report reviews the performance of the banking sector, and highlights other significant developments in the sub-sector every year.
"We are encouraged by the growth of deposit accounts as it signals that financial inclusion is a success," said Prof Njuguna Ndung’u, CBK’s Governor.
In a statement yesterday, Ndung’u expressed optimism about the banking sector’s outlook for 2011. He said he expects the growth momentum to be sustained boosted by continued expansion into regional markets. He said the sector is also poised to sustain the growth momentum as financial institutions continue to embrace new innovations underpinned by technological advancement.