KCB Bank has surpassed Equity as the largest lender in Kenya by asset size due to an aggressive expansion of foreign subsidiaries.
KCB’s total assets stood at Sh1.55 trillion in the year ending December, compared to Equity’s total assets of Sh1.44 trillion.
However, KCB trailed Equity in profitability in the period, with KCB stating it did not include the full-year profits from its recently acquired subsidiary in the DRC.
KCB chief executive Paul Russo and his Equity counterpart James Mwangi have maintained that the wider eastern Africa region offers an immense opportunity for new growth and signalled plans to continue with their expansion.
According to the regulatory disclosures, KCB’s customer deposits stood at Sh1.14 trillion, ahead of Equity’s Sh1.05 trillion. KCB Group and Equity Group are the only two Kenyan-based banks with more than a trillion shillings in customer deposits.
Shareholders of both banks will be keenly waiting to see the performance of both lenders when they release their first-quarter results in the near term.
Analyst view
“Consolidation remains a key theme going forward, with the current environment offering opportunities for well-capitalized banks to expand and take advantage of the market’s low valuations, as well as further consolidate smaller and less-capitalized banks.
Notably, the majority of the bigger banks have continued to cushion over unsystematic risks specific to the local market by expanding their operations into other African nations.
Banks such as KCB and Equity Group have been leveraging expansion and consolidation, which has largely contributed to their increased asset base as well as earnings growth. As such, we expect to see a continued expansion trend aimed at revenue optimization.
Additionally, the Ethiopian government opened up the financial sector to foreign investors which provides a great opportunity for Kenyan banks to expand their operations into the untapped market.” – Cytonn Investments FY’2022 Listed Banking Sector Review.
