This archive report was first published on 9 December 2019.
KCB Ranks as Most Attractive Bank in Kenya ¶
Kenya Commercial Bank (KCB) has emerged as the most attractive bank in Kenya, according to a recent report by Cytonn Investment. The report, themed 'Higher Net Interest Margins and Consolidation to Drive Growth in the Post Rate Cap Era', analyzed the Q3'2019 results of listed banks.
Published on December 9, 2019, the report highlighted KCB's ability to generate profits from its core business, making it the top-ranked bank in the country. The report also noted that the bank's franchise value and weighted score from both franchise and future growth opportunity perspectives were strong indicators of its attractiveness.
Other banks that made the top 10 list include I&M Holdings, Co-operative Bank, Equity Group Holdings Ltd, Stanbic Bank, Barclays Bank, Diamond Trust Bank Kenya, DTBK, NCBA Group Plc, and HF Group Plc. The report noted that the banks are beginning to adjust their business models back to private sector lending as opposed to investing in government securities.
David Gitau, an Investment Analyst at Cytonn Investments, attributed the growth in banks' Non-Funded Income (NFI) to increased emphasis on revenue diversification. He noted that the average NFI growth was 15.8% in Q3'2019, higher than the 5.9% growth witnessed in Q3'2018.
Gitau also explained that the interest rate cap was repealed in November 2019, allowing banks to refocus on core operations and take advantage of the removal of the cap. He noted that this could lead to more forays by banks into SME-focused lending.
