Kenya’s most expensive banks revealed in fresh charges study

Think Business CEO Ochieng Oloo during the Think Business 2016 Kenya Banks Tariff Survey Results on March 16, 2016. PHOTO | DIANA NGILA | NATION MEDIA GROUP 

By CHARLES MWANIKI, cmwaniki@ke.nationmedia.com

In Summary

• An average Kenyan is paying a mean of Sh12,515 yearly in tariffs, with Standard Chartered, Bank of India and Habib Bank Ltd ranked as the most expensive financial institutions.
• Standard Chartered has the highest tariffs per year at an average of Sh16,860, followed by Bank of India at 16,308 and Habib Bank at Sh15,920.

The high charges banks are imposing on accountholders were Wednesday laid bare in a study that is likely to fuel the raging debate over the burden the economy is having to bear for lenders to make billions of shillings in profits.

An average Kenyan is paying a mean of Sh12,515 yearly in tariffs, with the survey conducted last month singling out Standard Chartered, Bank of India and Habib Bank Ltd as the most expensive financial institutions.

The Think Business magazine survey shows that on average, the tariff costs for retail banking customers rose 4.5 per cent between 2015 and 2016 while that of small and medium enterprise (SME0 customers went up five per cent.

“The charges are going up yet the banks have become more efficient through adoption of alternative channels such as mobile money. Ideally they should be reducing,” said Think Business chief executive officer Ochieng Oloo.

The survey came as Parliament debated a Banking Amendment Bill to cap loan charges to rein in what they view as overpricing by banks seen as obsessed with making profits at the expense of borrowers.

“We can’t run an economy whose sole purpose is to serve the banks and make their profits big,” Seme legislator James Nyikal said.

The new findings show Standard Chartered has the highest tariffs per year at an average of Sh16,860, followed by Bank of India at 16,308 and Habib Bank at Sh15,920.

The three lenders have, however, not increased their tariffs from the 2015 rates. Ten out of the 39 banks surveyed raised their tariffs in the year to February 2016, while five cut theirs.

On the other end Prime Bank charges the lowest tariffs at Sh5,100, followed by Equity Bank at Sh6,340 and Credit Bank at Sh6,580.

Among the other large lenders, KCB is charging Sh11,480, Cooperative Bank Sh8,680 and Barclays Sh9,940.

Think Business used as its model customer an individual in formal employment who is married and has two children of school-going age, and who uses two 50 leaf cheque books a year, does eight ATM withdrawals monthly and uses six bankers cheques for school fees payments per year.

The individual is also charged a monthly ledger fee and salary processing fee on the account.

“Most of the non-interest income is in ledger fees and point of sale fees. The bigger banks are therefore able to make more based on higher customer volumes, and we also see those with a larger number of agents generating more money,” Mr Oloo added.

The survey shows the industry cost of banking per year for an SME with an annual turnover of less than Sh5 million had gone up to Sh55,584 by February 2016 from Sh52,712 in 2015.

READ: Lenders charging SMEs higher banking fees, interest rates