Category Archives: Access Bank

5 Kenyan banking stories of 2022 and 2023

2022 in Review 

1. Credit reference shake-up: A failure of banks to carry out proper credit education and to convey the benefits of good repayment to customers, through lower interest rates, caught up with them. This was combined with a tendency to blacklist defaulters at the earliest instance to punish them – and became an issue at political campaigns ahead of the August 2022 election.

The new government set in motion a plan to clear over 4 million borrowers from credit reference bureau blacklists This was in part a 50% waiver on their debt and a window of six months for borrowers to pay the balance of the amount. At the Absa Q3 results briefing, management of the bank explained that there would be no immediate impact as these were loans of people who got stuck in 2020 (during the Covid-19 disruption) that had already been fully provided for

2. CEO suite changes: At Absa Bank Kenya, MD Jeremy Awori left after nine years. He later joined Ecobank Transnational Incorporated, the parent of the Ecobank Group, as the Group CEO replacing Ade Ayeyemi, who retired after attaining the age of 60. Absa Kenya then picked its Chief Financial Officer Yusuf Omari to take over as interim CEO  as  Moses Muthui was made the interim CFO. 

At KCB Joshua Oigara left after nine years and later in the year joined the Standard Bank group as the CEO of Stanbic Kenya and South Sudan, after Charles Mudiwa retired after two decades. KCB appointed Paul Russo, who was MD of their National Bank subsidiary as the new KCB Group Chief Executive Officer. Following that, KCB now has Anastacia Kimtai as the acting KCB Kenya MD and Peter Kioko as the acting MD of National Bank of Kenya

At the I&M Group, the CEO of I&M Bank Kenya Kihara Maina moved on to be the group’s regional CEO, taking over from Chris Low, and the new Kenya MD is Gul Khan who joined from Airtel Money Africa. 

Cooperative and Diamond Trust and Equity banks still retain their long-serving leadership though, at Equity, Polycarp Igathe stepped down as Chief Commercial Officer to contest for the Nairobi Governor seat in the August 2022 elections. edit And from Mwango Capital, we learn of more leadership changes at banks with Sam Muturi joining as Consolidated Bank’s new CEO and Anuj Mediratta as CEO of Gulf African Bank with Helen Chepkwony as the acting CEO of the Kenya Deposit Insurance Corporation (KDIC). Also, Shelter Afrique had another executive change with Thierno-Habib Hann stepping in as the new MD/CEO, replacing Kingsley Muwowo, the CFO, who had been the interim boss. Another change saw Rose Kagucia become the Acting CEO/Managing Director at Dubai Islamic Bank, replacing Peter Makau.

3. Capital raising and arranged marriages: Banks set out to raise new capital in different ways. Larger banks with foreign links like Absa can attract Tier II funding at low rates (of about 3%) which is lower than the cost of deposits or the bond markets (about 9%). Smaller banks arranged sales like Spire to Equity and Sidian to Access while deposit-taking microfinance banks found fintech partners. Key Microfinance is now LOLC Kenya, UMBA, a Delaware fintech bought 66% of Daraja Microfinance Bank, Century Microfinance became Branch Microfinance Bank and Uwezo Microfinance is now Salaam Microfinance Bank. 

4. Green finance is in: Banks report on it and the Kenya Bankers Association published sustainable finance guidelines and principles for banks to align their processes and products (including loans) and the Central Bank has guidelines on climate risk management. Banks are now attracting “green finance” and touting their green credentials joining new green alliances and measuring their activities such as tree planting and reducing their carbon footprints. 

5. Resurgence of the bank branch” Co-Op, Diamond Trust, Family, and NCBA bucked the branch closure trend to show that digital growth needs a physical presence to support it. 

Outlook for 2023

1. Go Big in Ethiopia: Following Safaricom’s big entry into Ethiopia, will banks now follow into the next big African market African after DRC that has delivered big for Equity? Kenyan bank support new partners of the telco that can lead to other businesses in the country that need to unlock financing – and take on the local giant Commercial Bank of Ethiopia (27th largest in Africa), which is not growing its assets now with currency restrictions and a prolonged war. The entry path for foreign banks is now set and KCB, Equity and Stanbic are among the dozen foreign bank that have had representative offices in the country for a few years.

2. Will digital bank customers stick around? January 1 sees a return of several bank charges that were waived in March 2020 at the start of the Covid-19 wave to enable bank customers to make digital and contactless payments. Many tried out digital services offered by their banks for the first time as they were now free of charge. Non-funded income is key for bank profits, but it will be seen how the return of bank and mobile payments/transfer charges will be received by customers are different banks. In this economy, customers are more cost-conscious than ever, especially with the government tax on every bank transaction going up to 20% in 2023.  

3. New savings and investment products that target diaspora, retail and unbanked customers. While lending to the “hustler” economy is well-documented, digital wealth creation and preservation products are still lagging.

Ahead of the much-anticipated IPO’s to come to the Nairobi Securities Exchange, EFG Hermes has invested in a platform for retail investors and this week Acorn got approval for Vuka, a platform for retail investors to into REIT’s.

4. African banks get serious about Nairobi: Access (17th largest in Africa) Ecobank (18) and UBA (25) have all had relatively small footprints in Kenya but now have a chance to grow. Across Africa, there are changes in the banking hierarchy with the largest bank group by asset size for decades, Standard Bank of South Africa with a sluggish home economy about to be passed by the National Bank of Egypt 166 billion, as Egypt Bank Misr has also passed SA’s Absa group to be number six on the continent. You can also expect a resurgence in West Africa, into East, perhaps by buying more banks, as Access is with its second bank deal (for Sidian) to leap up the Kenya asset ranks which are led by Equity (37th in Africa) and KCB (40). edit. However, in January 2023, Centum Investments cancelled the agreement to sell its 83.4% stake in Sidian Bank to Access Bank.

edit Jan 27, 2023.

5. The year is expected to usher in a new regime at the Central Bank of Kenya with a new Governor, Deputy (2 positions) and Chairman by June 2023. The current cabinet Secretary of the National Treasury (i.e. the Finance Minister) is himself a former CBK governor. 

Kenya’s Top Banks in 2022

Spire (38th in assets), the smallest bank in the country, had been up for sale, and Mwalimu Sacco announced that they would not be putting in any more capital in the Kshs 3.5 billion asset bank to bury a bad investment made in 2015, but still faces resistance from some stakeholders. Equity Group (2) agreed to buy Spire‘s assets in September 2022.

Access, the largest bank group in West Africa, bought Transnational, the 33rd largest bank in Kenya in 2019 and renamed it. Then in June 2022, Access announced that they would take over Sidian Bank (20) with Kshs 43 billion of assets, by buying a majority stake from Centum for Kshs 4.3 billion. 

President William Ruto announced at the Nairobi Securities Exchange in October that Credit Bank (27) along with Bio Foods were on a path to floating their shares at the NSE. He encouraged the private sector to join the new government in working to revitalise the NSE and promised 5 to 10 public listings – and where Development Bank (29) may also feature. 

First Community Bank (26) overcame a mini-run in October and assured panicked depositors that their funds were safe.

Top 10, by assets in June 2022.

10. Bank of Kigali, which is cross-listed in Nairobi. 

9. I&M.

8. Stanbic Bank

7. Diamond Trust

6. Standard Chartered

5. Absa Bank Kenya.

4. NCBA briefly edged ahead of Co-op for 3rd in the assets race this year.

3. Co-operative Bank

2. Equity Bank have a slight edge in group assets over KCB Group (both at Kshs 1.26 trillion) after buying two banks in DRC.

1. KCB Kshs 887 billion assets and Kshs 23.8 billion profit as of June 2022 and then bought into DRC before the end of the year. 

$1 = Kshs 118 in June 2022.

Access Bank buys out Transnational Bank in Kenya

Kenya’s Competition Authority has confirmed approval of a deal in which Access Bank PLC has bought out 93.57% of the shares of Transnational Bank PLC.

Kenya’s  Transnational (TNBL), the 36th largest bank by assets, had a balance sheet of Kshs 10.23 billion ($100 million) at the end of 2018 comprising deposits of Kshs 8 billion and Kshs 6.6 billion of loans. During the year it lost Kshs 98 million, after making Kshs 53 million in 2017, a year in which interest income declined, following the passage of interest rate caps in Kenya.  Transnational is rarely in the news but is active in corporate banking, financing of agricultural ventures, and some sports sponsorships. It has 28 branches and 97,000 customers.

Access merged with Diamond Bank last year, becoming the largest bank in Nigeria, by market share through a push into digital banking. The takeover by Access, one of  the largest banks in West Africa, marks an expansion of its foot print in Eastern Africa which included D.R Congo and Rwanda. Access Bank is listed on the Nigeria Stock Exchange.

Large Bank Engagement Programs: Nigeria and Kenya

How do large banks engage with the public? Some have programs that go beyond the usual corporate social responsibility – and which go out to address unique national challenges or provide opportunities to large segments of the population who may also be customers of the bank

Kenya scholarships and training.

In Kenya, large banks have some education programs, offering scholarships and support to gifted primary and high school students in different counties. The largest of these has been Equity Bank, which has its “Wings to Fly” leadership program. In nine years, Wings to Fly has given over 15,000 scholarships to needy or financial challenged pupils, 8,000 of who attained the university entrance grade after secondary school.

There are also other entrepreneurship forums, training programs and business clubs.

KCB has a KCB2Jiajiri, a Kshs 50 billion program started in 2016 that aims to benefit 500,000 entrepreneurs in 5 years, thereby creating at least 2.5 million direct and indirect jobs. 

Barclays

Barclays Bank of Kenya launched Ready to Work, a free online training program to help college students and recent graduates get “job-ready” for a world of work. The bank also has a business club founded in 2003 that has supported over 9,000 companies and whose entrepreneur members have traveled to network and trade in over ten countries.

Nigerian bank do mega events:

Access Bank: In December, Access Bank had a huge year-end musical event.

The Bank also hosted a “Born In Africa Fest,” a musical event that was attended by over 25,000 guests.

Ecobank: The bank has a recurring fintech challenge to find financial technology companies with solutions and models that can scale across Africa.

GT Bank

GT Bank stages an annual fashion event called the GTBank Fashion Weekend that brings together fashion and business leaders from around the world to create the biggest fashion experience in Africa.

They also aim to showcase African art in different countries.

UBA: Unique among the banks is UBA, who in conjunction with their Chairman, and his Tony Elumelu Foundation have just launched the fifth year of a $100 million entrepreneurship challenge a philanthropic program that aims to find, train and fund 10,000 African entrepreneurs. So far, over 4,470 entrepreneurs have benefited, and, through UBA in Kenya, over 350 local entrepreneurs in Kenya have received the seed capital of $5,000 for their businesses, training and mentoring, and many of them have been to Nigeria to attend an annual congress of entrepreneurs.

The number of applicants has been increasing each year. Last year there were over 150,000 applicants, and this year applications are all being done via TEFConnect, which is billed as the largest digital networking platform for African entrepreneurs.

The TEF Entrepreneurship Program is open to citizens and legal residents of all African countries, who run for-profit businesses based in Africa that are no older than three years. The deadline for applications submission is March 1, 2019.

Zenith Bank

Zenith Bank held “Style by Zenith,” a flagship Lifestyle, beauty, fashion, accessories and entertainment fair, in conjunction with Fashion One, in the last weekend of December 2018.

Nigerian Banks – Diamond and Access to merge

After weeks of speculation, Diamond and Access Banks announced a merger to create the largest bank in Nigeria.

It was reported that the Diamond Bank spurned offers to inject critical capital from US private equity firm, Carlyle that was a key shareholder in the bank and sought other deals, and the statement points to a competitive process out of which Diamond selected Access Bank.

According to an FT report, the deal values Diamond at just over $200 million and would create Nigeria’s biggest bank by both deposits and assets and that the merged entities would have 650 branches and 6,800 that would see some savings through redundancies.

Access will acquire Diamond through a combination of cash and shares with Diamond shareholders receiving Naira 3.13 per share, comprising N1.00 per share in cash and the allotment of 2 new Access Bank ordinary shares for every 7 Diamond Bank ordinary shares held.

The merger will result in the end of Diamond Bank with listings of its shares cancelled at the Nigeria Stock Exchange and the London Stock Exchange when the merger is completed in the first half of 2019. Access is listed in Nigeria, while Diamond was also caught up in the Nigeria vs. MTN forex case.

The Banker Magazine ranked five Nigerian banks among 1,000 top global banks with Zenith, Guaranty Trust, FirstBank, Access Bank and United Bank for Africa featuring. Another ranking of the top banks in Nigeria in 2017 listed Nigeria Zenith, Guaranty Trust, First Bank of Nigeria, Ecobank Nigeria, Access Bank, United Bank for Africa, Diamond Bank, Union Bank of Nigeria, and Fidelity Bank. The banks with a presence in Kenya are Guaranty Trust Bank (GTBank), Ecobank and United Bank for Africa (UBA).

edit March 2019 Approvals: The merger decision was approved by 98% of Access Bank shareholders, while at Diamond Bank it got 100% (99.98%) approval. Also, the Central Bank of Nigeria and the Securities and Exchange Commission have approved for the combined businesses to start business on April 1, 2019, as a Pan-African bank operating in 12 countries, 3 continents. The combined banks (Access had 11.8% market share and Diamond 4%) will have 15.9% making it largest Nigerian bank ahead of Zenith (14.6%), FBN (13.9%) and UBA (11.7%)

Digital banking: The new bank has been hailed by the deal backers as creating Africa biggest retail bank by customer base (29 million) with 677 branches, and 3,100 ATM’s. On the digital side, Access had 3 million customers compared to Diamond’s 10 million online banking customers and Access will incorporate elements of Diamond’s banking services such as XclusivePlus, DiamondXtra and Pay Day loans. 

No new capital: Post-deal ownership of the bank will comprise 81% Access shareholders and 19% Diamond shareholders. Access was expecting to proceed to raise Naira 75 billion ($207 million) of capital and had got approval for a rights issue to happen in the first half of 2019, but they will no longer pursue this avenue as they have identified 150 billion Naira in revenue and cost synergies to be tapped over the next three years.