Standard Chartered Bank Most Expensive Bank in Kenya

Standard Chartered Bank, Bank of India and Habib Bank Ltd have been said to be the most expensive financial institutions, where an average Kenyan ends up paying a mean of Sh.12,515 every year on tariffs.

The tariffs for Standard Chartered in a year were said to be averagely Sh.16,860, Bank of India following with Sh.16,308 and Habib Bank taking the third position with Sh.15,920. This comes at the time when parliament just debated a Banking Amendment Bill to oversee reduction of tariffs as it was said that the banks are after making big profits at the expense of borrowers.

Banks with the lowest tariffs were said to be Prime Bank at Sh.5,100, followed by Equity Bank at Sh.6,340 then Credit Bank at Sh.6,580. Ten out of the 39 banks in the country were said to have increased their tariffs up to February 2016, while five banks were said to have cut theirs.

A survey by Think Business magazine stated that banks charges keep going up as years passes by, instead of reducing since most of the banks have adopted efficient alternative channels like mobile money. The survey further stated that retail banking customers tariff costs rose to 4.5 per cent between 2015 and 2016 while that of SMEs went up by 5 per cent.

The Kenyan economy is undergoing some strains when on the other hand lenders keep making billions of money in form of profits from money borrowers. Most Banks with higher tariffs are those said to be big, thus making more profits due to the high number of customers that are subscribed to them.

Equity Bank’s non-interest revenue rose 18.8 per cent to Sh21.9 billion last year, representing 37 per cent of total income. KCB’s no-interest income was up six per cent to Sh23.4 billion, also representing 37 per cent of total income.

Barclays and NIC saw their non-interest income rise by 4.3 per cent and 12 per cent respectively to Sh9.05 billion and Sh4.26 billion, representing 30 per cent and 29 per cent of total revenue.

Average bank lending rates rose by 2.2 percentage points between June and December 2015 to 18.3 per cent, pushing the interest margins earned by banks up to 10.38 per cent after taking account of the average fixed-deposit rate of 7.92 per cent as at the end of December.

Banks are ideally chasing after a 50-50 split between transactional and interest income, owing to the relative safety and predictability of the non-interest income stream that is less likely to be affected by market swings in interest rates.

According to CBK data, the banking sector in 2014 made a total of Sh101.02 billion in non-interest income, representing 24.5 per cent of their total income for the year. The CBK is yet to release the 2015 figures.

Article by Vera Shawiza.