Bankings Survey

Market Share Analysis of the Kenyan Banking Sector (2019-2023)

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Overview

The Kenyan banking sector demonstrated remarkable resilience and growth from 2019 to 2023, with significant shifts in market share across different tiers of banks. This comprehensive analysis examines the performance of individual banks and tiers across key financial metrics.

Asset and Liability Analysis

Total Assets

Tier 1 banks (>Ksh 250B) dominated the market:

2023 market share: 77.15%
2019 market share: 74.99%
Growth: 2.16 percentage points

Other tiers:

Tier 2 (Ksh 75B-250B): 14.55% in 2023, down from 15.59% in 2019
Tier 3 (Ksh 20B-75B): 5.85% in 2023, down from 6.83% in 2019
Tier 4 (<Ksh 20B): 2.46% in 2023, down from 2.59% in 2019

Top performers:

Kenya Commercial Bank (KCB): 18.43% in 2023, up from 14.02% in 2019
Equity Bank: 12.98% in 2023, up from 10.55% in 2019
Co-operative Bank of Kenya: 8.68% in 2023, down from 9.35% in 2019

Total Liabilities

Tier 1 banks maintained dominance:

2023 market share: 77.49%
2019 market share: 75.19%
Growth: 2.30 percentage points

Other tiers:

Tier 2: 14.34% in 2023, down from 15.42% in 2019
Tier 3: 5.77% in 2023, down from 6.85% in 2019
Tier 4: 2.39% in 2023, down from 2.54% in 2019

Top performers:

KCB: 19.07% in 2023, up from 14.25% in 2019
Equity Bank: 13.39% in 2023, up from 10.72% in 2019
Co-operative Bank of Kenya: 8.26% in 2023, down from 9.13% in 2019

Net Assets (Shareholders’ Funds)

Tier 1 banks led the market:

2023 market share: 74.78%
2019 market share: 73.85%
Growth: 0.93 percentage points

Other tiers:

Tier 2: 15.94% in 2023, down from 16.54% in 2019
Tier 3: 6.33% in 2023, down from 6.71% in 2019
Tier 4: 2.94% in 2023, up from 2.91% in 2019

Top performers:

KCB: 14.03% in 2023, up from 12.71% in 2019
Co-operative Bank of Kenya: 11.50% in 2023, up from 10.58% in 2019
Equity Bank: 10.19% in 2023, up from 9.59% in 2019

Income Analysis

Interest Income on Loans & Advances

Tier 1 banks held a strong position:

2023: 79.22% market share (Ksh 348,612 million)
2019: 78.71% market share (Ksh 208,627 million)

Other tiers:

Tier 2: 11.62% in 2023, up from 10.08% in 2019
Tier 3: 6.67% in 2023, down from 8.41% in 2019
Tier 4: 2.49% in 2023, down from 2.80% in 2019

Top performers:

KCB: 16.97% in 2023, down from 19.10% in 2019
Equity Bank: 13.47% in 2023, up from 10.88% in 2019
Co-operative Bank: Maintained around 10-11% market share

Interest Income on Government Securities

Tier 1 banks increased dominance:

2023: 70.64% market share (Ksh 166,589 million)
2019: 67.86% market share (Ksh 82,756 million)

Other tiers:

Tier 2: 21.05% in 2023, down from 25.84% in 2019
Tier 3: 5.83% in 2023, up from 4.19% in 2019
Tier 4: 2.48% in 2023, up from 2.11% in 2019

Top performers:

Equity Bank: 17.09% in 2023, up from 12.84% in 2019
KCB: 13.78% in 2023, up from 9.85% in 2019
NCBA Bank: Maintained around 10% market share

Net Interest Income

Tier 1 banks maintained a strong position:

2023: 78.23% market share (Ksh 331,035 million)
2019: 80.04% market share (Ksh 213,275 million)

Other tiers:

Tier 2: 13.47% in 2023, up from 13.44% in 2019
Tier 3: 5.97% in 2023, up from 4.39% in 2019
Tier 4: 2.33% in 2023, up from 2.13% in 2019

Top performers:

KCB: 15.31% in 2023, down from 18.34% in 2019
Equity Bank: 14.35% in 2023, up from 12.44% in 2019
Co-operative Bank: Maintained around 10-11% market share

Forex Earnings

Tier 1 banks dominated but saw fluctuations:

2023: 77.50% market share (Ksh 54,686 million)
2019: 80.72% market share (Ksh 24,930 million)

Other tiers:

Tier 2: 16.05% in 2023, up from 13.01% in 2019
Tier 3: 4.72% in 2023, up from 4.70% in 2019
Tier 4: 1.73% in 2023, up from 1.57% in 2019

Top performers:

Stanbic Bank: 12.76% in 2023, down from 15.75% in 2019
Standard Chartered Bank: 11.97% in 2023, up from 10.28% in 2019
NCBA Bank: 10.69% in 2023, up from 8.59% in 2019

Profitability Analysis

Operating Profits Before Provisions

Industry Overview:

Total industry operating profits increased by 70.54% from 2019 to 2023
Industry aggregate: Ksh 335,062 million (2023)

Tier 1 Banks:

Aggregate: Ksh 282,068 million (2023), 65.54% increase from 2019
Market share: 84.18% in 2023, down from 86.84% in 2019
Top performers: KCB (Ksh 58,315 million), Equity Bank (Ksh 48,176 million), Co-operative Bank (Ksh 38,026 million)

Other tiers:

Tier 2: 11.14% in 2023, down from 11.41% in 2019
Tier 3: 3.47% in 2023, up from 1.59% in 2019
Tier 4: 1.21% in 2023, up from 0.16% in 2019

Notable performers:

Citibank (Tier 2): Ksh 14,284 million (147.59% increase)
Bank of Africa (Tier 3): Ksh 2,248 million (significant turnaround from negative profits in 2019)
M Oriental Bank Limited (Tier 4): Ksh 472 million (143.14% increase)

Loan Loss Provisions

Industry Trends:

Total industry loan loss provisions grew by 178.44% from 2019 to 2023
Industry aggregate: Ksh 109,920 million (2023)

Tier 1 Banks:

Aggregate provisions: Ksh 95,474 million (2023), 231.33% increase from 2019
Market share: 86.86% in 2023, up from 73.04% in 2019
Key players: Equity Bank (Ksh 22,982 million), KCB (Ksh 25,063 million), ABSA Bank Kenya (Ksh 9,245 million)

Other tiers:

Tier 2: 7.37% in 2023, down from 12.33% in 2019
Tier 3: 4.60% in 2023, down from 12.26% in 2019
Tier 4: 1.17% in 2023, down from 2.37% in 2019

Notable performers:

Family Bank (Tier 2): Ksh 1,388 million (89.03% increase)
Sidian Bank (Tier 3): Ksh 1,360 million (237.37% increase)
M Oriental Bank Limited (Tier 4): Ksh 285 million (115.66% increase)

Profit Before Tax and Exceptional Items

Industry Performance:

Industry’s profit before tax grew by 43.99% from 2019 to 2023
Total industry profit before tax: Ksh 227,080 million (2023)

Tier 1 Banks:

Aggregate profit: Ksh 187,785 million (2023), 32.64% increase from 2019
Market share: 82.69% in 2023, down from 89.75% in 2019
Top performers: Co-operative Bank (Ksh 32,018 million), ABSA Bank Kenya (Ksh 22,260 million), NCBA Bank (Ksh 21,700 million)

Other tiers:

Tier 2: 13.17% in 2023, up from 11.59% in 2019
Tier 3: 2.92% in 2023, up from -1.08% in 2019
Tier 4: 1.22% in 2023, up from -0.26% in 2019

Notable performers:

Citibank (Tier 2): Ksh 14,122 million (150.13% increase)
Gulf African Bank (Tier 3): Ksh 1,529 million (604.83% increase)
Middle East Bank (Tier 4): Ksh 422 million (653.06% increase)

Risk Analysis

Non-Performing Loans (NPLs)

Industry Overview:

Total NPLs in 2023: Ksh 271,781 million
Growth since 2019: 94.58%
Tier 1 banks dominate with 76.45% of total NPLs

Top Performers (Highest NPL Share):

KCB: 23.37%
Equity Bank: 14.48%
Co-operative Bank of Kenya: 10.55%

Other tiers:

Tier 2: 11.56% in 2023, down from 19.15% in 2019
Tier 3: 9.62% in 2023, down from 14.59% in 2019
Tier 4: 2.65% in 2023, down from 4.32% in 2019

Total Provisions

Industry Overview:

Total provisions in 2023: Ksh 381,806 million
Growth since 2019: 93.06%
Tier 1 banks hold 75.89% of total provisions

Top Performers (Highest Provision Share):

KCB: 26.91%
Co-operative Bank of Kenya: 10.02%
Equity Bank: 10.61%

Other tiers:

Tier 2: 12.76% in 2023, down from 13.35% in 2019
Tier 3: 8.75% in 2023, up from 8.03% in 2019
Tier 4: 2.60% in 2023, down from 2.70% in 2019

Risk Management Efficiency

Coverage Ratio (Provisions/NPLs):

Industry average in 2023: 1.41
Slight improvement from 1.42 in 2019

Top Performers (Highest Coverage Ratio):

UBA Kenya Bank: 10.93
Citibank: 3.48
ABSA Bank Kenya: 1.93

Conclusion

The Kenyan banking sector shows a dynamic landscape dominated by Tier 1 banks, with increasing competition from smaller institutions. While Tier 1 banks maintain their dominance across most metrics, lower-tier banks are showing growth in certain areas, particularly in profitability and forex earnings. The sector’s overall growth, coupled with rising NPLs and provisions, indicates both opportunities and challenges for banks across all tiers.