The just released 2017 Annual Bank Supervision Report by Central Bank of Kenya (CBK) reveals an interesting realization on the changing fortunes of banks as they push for a position in a competitive market.
The banking Sector Market Share analysis has KCB retaining its position posting a market share index of 14.4percent, followed by Coop bank with 9.93percent, Equity 9.85percent, Stanchart 7.11percent, DTD 6.72percent, Barclays 6.57percent, CBA 6.05percent and Stanbic’s 5.62percent to close the top Tier 1 Group.
Notable changes include the rise of Cooperative Bank to second position displacing Equity to third and the rapid retreat by Barclays from the fourth position in 2016 to sixth in 2017. Both Stanchart and DTB retain their steady climb to rank fourth and fifth respectively. It is not apparent yet whether the loss of market share by Barclays has any connection with possible market jitters surrounding the change in ownership and rebranding that is on the process.
Generally, 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 interest rate capping that dramatically cut operating margins especially for lenders who previously enjoyed 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 too. 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 market share Index is calculated by taking into account bank results across five key performance indicators namely total net assets, total deposits, total shareholders’ funds, total deposit accounts and total loan accounts.