Customers in Kencom branch of KCB in Nairobi. FILE PHOTO | NMG
Kenyan banks are making more money from their customers compared
with their much larger Nigerian counterparts thanks largely to
technology, ratings agency Moody’s says in a new report.
Deployment
of mobile channels to replace brick and mortar and hiring of third
party agents have helped banks cut the number of branches from 1,518 in
2017 to 1,505 in 2018 according to Central Bank of Kenya latest industry
data.
Last year the number of staff stood at 31,889 on
increasing from 30,903 in 2017 but lower than the decade high of 36,923
in 2014.
“Kenyan banks’ cost-to-income ratios averaged
49 percent over the last four years, compared with 57 percent for
Nigerian banks. This, together with lower provisioning requirements,
supports the higher profitability of Kenyan banks,” Moody’s said.
Entry
of Nigeria’s largest lender Access Bank into Kenyan will give it
exposure to the market that has learned to manage costs and tap into
huge retail base through the mobile phone according to the agency.
A number of Nigerian lenders including United Bank of Africa,
Guarantee Trust Bank and lately Access Bank through purchase of
Moi-linked Transnational, have a presence in Nairobi, which Moody’s
analyst say has a superior cost-saving model compared to Lagos.
Moody’s
also pointed out that Kenyan banks unshackled from the constraints of
the rate cap are set to land a windfall that will boost earnings.
Removal
of the rate cap has seen increased interest in the banking counters at
the Nairobi Securities Exchange that saw them rally on expectation of
future growth. Although the Kenyan lenders are releasing third quarter
figures which are yet to be affected by the deregulation of interest
rates, expectations going forward are positive.
“Kenyan
banks will continue to benefit from their higher net interest margins
because the recent removal of interest rate caps on their lending will
increase their loan yields,” Moody’s said.
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