Kenya has 44 banks; 31 are locally owned and 13 are foreign owned. The locally owned financial institutions comprise three banks with significant shareholding by the Government and State Corporations, 27 commercial banks and one mortgage finance institution, Housing Finance.
There were two representative offices of foreign banks and five deposit-taking micro-finance institutions (DTMs). The sector recorded an accelerated 51.8 per cent growth in pre-tax profit during the year.
The banking sector’s profit before tax increased by 20.5 per cent from Kshs74.3 billion ($874.2 million) in December 2010 to Kshs89.5 billion ($105.3 million) in December 2011.
Net loans and advances recorded a growth of 31.4 per cent from Kshs876.4 billion ($10.3 billion) to Kshs 1.152 trillion ($13.6 billion) in December 2011. In 2010, bank lending as domestic credit was Kshs1.275 billion ($15 million); broad money supply rose by 21.6 per cent to Kshs1.272 billion ($14.9 million).
Total deposits and total assets held by financial institutions both recorded growth rates of 22.9 per cent and 24.1 per cent respectively.
The country’s banking sector has recorded exponential growth with bank branches rising from 534 as at December 2005 to more than 1,000 in 2011. The number of rural branches has grown by more than 150 per cent compared to over 70 per cent growth in urban areas over the same period, which has highly boosted financial inclusion in the country.
The Government has reformed banking to make it internationally competitive. In 2007, the Ministry of Finance proposed to raise bank capital from Sh250 million ($2.94 million) to Sh 1 billion ($11.8 million) by 2010. This deadline has since been pushed to 2012.
Foreign banks (Nigerian, South African and others) are investing in low-capital institutions. After the profit growth of the first five years of the Kibaki administration, bank expansion has since crossed borders to Tanzania, Rwanda, Southern Sudan, Mauritius and Uganda. Local banks such as Equity, KGB, Diamond Trust, l&M, ABC and Cooperative are present in the region.
The banking industry in Kenya as at December 2011 had 2,205 automated teller machines (ATMs), up from 1,979 in 2010, representing a 11.4 per cent increase.
A significant recent development in the banking sector has been the licensing of agent banking. As at the end of 2011, eight commercial banks had 9,748 licensed and active agents who facilitated more than eight million transactions worth Kshs43 billion ($506 million). Some 8,000 agents had been licensed in 2010, a factor that is widening the gap in financial access between Kenya and its East African Community partners.
In 2011, the banks’ total assets were worth Kshs1.5 trillion ($17.65) billion). Profit before tax was in excess of Kshs80 billion ($94.1 million). The Kenya Commercial Bank is the biggest, with risk-Weighted assets worth Kshs331 billion ($3.9 billion) in 2011.
Other major banks are Barclays, Equity, Standard Chartered, Co-perative, National and Citi.
