Published On: Thu, Sep 7th, 2017

East Africa’s banks optimistic outlook despite challenges

The African Business ‘Top 100 Banks’ survey, which was published in October 2016, underlined the growing importance of East Africa in the continental banking industry.

The region has long been underrepresented in the Top 100 in comparison with the size of its population but has gained two entrants every year since 2013, taking it from 10 that year to 16 in the 2016 table. As a result, the combined value of the East African banks listed in the survey increased from $4.1bn in 2015 to $4.7bn last year.

This is partly a function of strong economic growth, particularly in comparison with the rest of Africa. The region is not as reliant on the export of oil, gas and mining commodities as the rest of the continent and has also benefited from low oil import costs over the past four years. The Kenyan and Ugandan economies have grown by an average of 5.5% a year since 2010, while Tanzania has managed 6.7%.

The biggest bank in East Africa, according to the 2016 African Business survey, is Kenya Commercial Bank, with Tier 1 Capital of $717m, a rise of $68m on 2015. It is closely followed by Equity Bank, which recorded a big increase from $515m in 2015 to $655m in our 2016 rankings, on the back of growth in its loan book and government securities.

Nairobi remains the most developed financial services centre in the region and now has 10 banks in the Top 100, all of which have more than $100m in Tier 1 Capital. Only Nigeria and Egypt have more. Credit ratings agency Moody’s classifies Equity Bank as the most secure in Kenya with a B1 rating because of the positive impact of its digital and agency banking strategy. read more: AB