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Eastern Africa Banking Sector Strong economies stimulate asset growth,
A review of the 2013 calendar year
FOREWORD 03
EXECUTIVE SUMMARY 04
SPECIAL TOPIC: CREDIT REFERENCE BUREAUS 13The importance of credit in the economy 14
How CRB’s support Financial Sector growth 15
Findings from the survey 16
Conclusion 18
ECONOMIC REVIEW 19Economic growth 20
Gross domestic product 21
Foreign exchange rate (to the US$) 22
TANZANIA BANKING SECTOR OVERVIEW 23Banking sector growth 24
Capital adequacy 32
KENYA BANKING SECTOR OVERVIEW 39
Capital adequacy 46
UGANDA BANKING SECTOR OVERVIEW 51
Capital adequacy 58
RWANDA BANKING SECTOR OVERVIEW 63
KURT BANKING SECTOR ANALYSIS 75
Concluding remarks 80
Eastern Africa Banking Sector: 1
The Eastern Africa Banking Sector review 2013, covering
Kenya, Uganda,Rwanda and Tanzania known as KURT, is
key performance metrics in the banking sector, providing
perspectives that contribute to building the knowledge
Our region continues to attract growing interest from a
Whilst a number of other emerging markets stalled in recent
banking sector will play a fundamental role in driving the
Our special topic this year focuses on the role of credit
extension, and how that in turn could help stimulate
Joseph SheffuCountry LeaderEY Tanzania
Eastern Africa Banking Sector: 3
highlight the following points:• Total KURT banking assets rose by 15% to US$ 52bn in
-
• Bank assets grew three times faster than GDP in
•
• declining interest rates – in three of the four KURT
• Kenya remains the dominant banking market in the region, holding more than half of total banking assets, with growth outpacing that of its regional
• KURT’s share of the total sub-Sahara African banking market is gradually rising although South Africa remains by far the
• Large banks typically enjoy stronger economies of scale
globe, and KURT is no exception, although Rwanda stands out as a market where smaller banks enjoy some noticeable
• to stimulate credit growth, and further down the line,
• provide will come at a cost in the short-term, as information
16%
13%
14%
12%
Kenyan banking assets grew
Ugandan banking assets grew
Tanzanian banking assets grew
Rwandese banking assets grew
to Kshs 2,7 billion (2.3bn)
to Ushs 17,2 billion (15.3bn)
to Tshs 18.9 billion.
to Rwf 1,3 billion (1.16bn)
Kenya60%
4%
13%
23%Tanzania
Uganda
Rwanda
Share of bank assest
Eastern Africa Banking Sector: 5
Financial inclusion in the banking sector is rising, as evidenced in Tanzania, Kenya, Rwanda and Uganda. This is in line with stronger economic growth, which is successfully incorporating more people into the formal economy.
remains low, even by emerging market standards, the banking sector has seen its retail client base rise by nearly half over the
of this critical function, credit bureaus can play a vital role by
Credit histories not only provide necessary input for credit underwriting, but also allow borrowers’ credit history to be
competitive lending markets and, ultimately, more affordable
people, and enabling lenders and businesses to reduce risk and
respect of customer credit behaviour, therefore, has a positive
Growth provides a stimulus to the banking sector
Within the KURT region, economic growth is undoubtedly
forecasts that Uganda’s economy will double in size between
Smaller markets enjoy higher margins but weaker economies of scale
larger economies of scale, and that results in higher returns to shareholders than is the case in the smaller markets (namely
ON FINANCIAL INCLUSION AND CREDIT REFERENCE BUREAUS
EY - All rights reserved 20146
higher margins than those in the larger markets, even if their
by global standards, and in line with banks in many emerging
considerable 240 basis point gap between its banks and
Country Capital adequacy ratio %
Kenya 16.0
Tanzania 13.6
Uganda 16.6
Rwanda 16.7
Average 15.7
The banking outlook remains promising
will continue to support growth in the banking sector in the
sector in the KURT region, the strongest growth will likely stem
The role of credit bureaus is also likely to play a major role in
availability of information, which in turn will stimulate banking
Strong growth will most certainly attract the attention of more
institutions will also no doubt seek to build a presence across
Eastern Africa Banking Sector: 7
METHODOLOGY AND APPROACH
Kenya
• There are 42 registered banks on The Central Bank of
-
- For comparison purposes, subsidiaries and branch operations outside Kenya were not included in the analysis
• The data is presented in thousands of Kenyan shillings
Rwanda
Uganda
Tanzania
from the analysis, given that their results include major
- Two banks started operations: UBL in May, and Maendeleo in September
- Maendeleo Bank commenced operation as a public limited company and is listed on the Dar es Salaam Stock Exchange
-for 2013 could not be obtained and hence the data is unaudited
-
December 2013 as per Bank of Tanzania)
EY - All rights reserved 20148
Algeria Libya Egypt
Mauritania Mali
Côte d’Ivoire Gabon
Equatorial Guinea
Congo
Central AfricanRepublic
Cameroon
Nigeria
Niger Chad Sudan Eritrea
Ethiopia
SomaliaKenyaDemocratic
Republic ofCongo
Rwanda
Rwanda
Burundi Tanzania
Tanzania
Seychelles
Comoros
MalawiZambiaMauritius
Mad
agas
car
Reunion
Zimbabwe
Angola
NamibiaBotswana
South Africa LesothoSwaziland
Guinea
Sao Tome
Djibouti
Morocco
Burkina Faso
Ghan
a
Uganda
Uganda
Togo
Benin
Tunisia
CapeVerde
GambiaSenegal
LiberiaSierra Leone
GuineaBissau
Mozambique
SouthSudan
Kenya
Geographical representation of KURT
Eastern Africa Banking Sector: 9
SEGMENTATION
The report segments banking institutions into three key groupings in the case of Kenya, Uganda, and Rwanda, and four in the case of Tanzania. The peer groups are based on asset
Kenya, as laid out in the tables below.
Tanzania
Banks are classified by size, with NBFI’s classified separately
Large Medium Regional and Small
Barclays Access Advans
Citibank Akiba Amana
CRDB Azania Covenant
Exim BancABC DCB
Bank M Efatha
BOA Kagera
Stan Chart BOB Kili Coop
Stanbic BOI Maendeleo
CBA Mbinga
DTB Meru
Ecobank Mkombozi
Equity
Mwanga
Habib
IandM TCB
ICB TWB
KCB UBL
TIB Uchumi
TPB
Twiga UBA
Note:
regulated deposit taking institutions other
EY - All rights reserved 201410
Kenya
Peer groups
Large Medium Small
Barclays IandM ABC
CfC BOA Consolidated
Co – op BOB Credit
Equity BOI DBK
KCB CBA Equatorial
STD Chase Fidelity
Citibank Fina
DTB First
Ecobank Giro
Family Guardian
Housing Gulf
Imperial Habib
Habib AG
Jamii Bora
Prime K-Rep
Middle
Oriental
Paramount
Trans
UBA
Victoria
Eastern Africa Banking Sector: 11
Uganda
Peer groups
Large Medium Small
Stanbic HFB Tropical
Stan Chart Orient Ecobank
Barclays BOA UBA
Crane DTB Fina
Cantenary KCB CIB
DFCU Equity GTB
Citibank Imperial
BOB ABC
FTB
BOI
Rwanda
Peer groups
Large Medium Small
IandM Access Equity
BOK BRD
BPR Cogebanque
Ecobank GTB
KCBR
The analysis is focused on three main areas, namely:
1
2
3 Capital Adequacy.
EY - All rights reserved 201412
What is a credit bureau?
A Credit Bureau is an organization that compiles information relating to the identity, public record, legal history, credit transactions and credit history of Individuals and Commercial
A Credit Bureau is an essential element of a country’s
providing information which enhances credit availability and
a role in minimising information asymmetry between borrowers and lenders (providing borrowers comfort by understanding the
Credit bureaus provide this information to contracted, eligible subscribers, in the form of Credit Information Reports
Types of Credit Reference Bureaus (CRB)
Depending on the regulatory environment, the availability of and willingness to share credit information by data owners and the technological maturity of the market, the following types of Credit Bureaus may be established:
• Basic Credit Bureau Provides negative credit information only
• Full Credit Bureau Provides negative and positive credit information
• World Class Credit Bureau Provides the following services
-
-
-registries, courts, immigration etc)
-monitoring of Individual and commercial entities’ credit reports, and credit scoring
-
Credit Reference Bureaus in East Africa
The introduction of Credit Reference Bureau services in the
Absence of a CRB in East Africa has been a major hurdle to
Central banks, by way of their mandated responsibility, supervise the operations of CRB’s to ensure that the information collected is managed securely and responsively at all times and in accordance with the agreement between
specify the standards that the CRB shall implement in order to
passed the act in 2008 and there are currently two credit
Uganda passed its CRB regulation on 01 July 2005 and has
In Rwanda there was one CRB operating as of 31 December
Tanzania passed regulation in December 2012 and there are two CRB’s operating
The importance of credit in the economy
EY - All rights reserved 201414
1. Providing timely and accurate information
This is achieved through providing timely and accurate
compete with each other for customers, multiple borrowing
institutions do not have access to databases that capture
screening loan applications by enabling lenders to identify
An improved pool of borrowers - more and more unbanked
Recent research based on information from several countries (Singapore, Iraq, China, Romania, Vietnam, Cambodia, Brazil, and Hong Kong) show that the existence of credit registries facilitates increased lending volumes, growth of consumer
3. Reducing default rates
Default rates decline as borrowers seek to protect their
With the presence of a CRB, there is strong motivation for
Credit reports that include both positive and negative information help build reputation collateral in much the same way as a pledge of physical collateral, which may improve credit
In the long run, a bigger credit market and lower default
• To Lenders
-
-
-
-borrower
-
• To Borrowers
- Helps to build reputation through a history of responsible credit lending
- Provides access to credit to deserving borrowers
- Rewards good borrowers by easing access to credit at lower interest rates
- Enables borrowers to monitor and improve their credit records
• To Regulators
-
- Provides comprehensive and constantly updated data on borrowers and lenders – effective credit risk monitoring for the economy
- Facilitates credit expansion without compromising on the quality of credit
- Reduces non-performing loans and the probability of loan defaults
How CRB’s support Financial Sector growth
Eastern Africa Banking Sector: 15
Contribution of CRB’s to increasing
Research by Armstrong, (2008) based on information from several countries across the globe show that the existence of credit registries is associated with increased lending volumes, growth in consumer
Further, Hansen et al, (2004), highlighted that many borrowers make a lot of effort to repay their loans, but do not get rewarded for it because this good repayment history is not available to any bank they
fail to repay their loans, banks are forced to pass on the cost of defaults to other customers through
allows banks to better distinguish between good and
Angulin and Scapens, (2000) in their study indicated
lenders to assess the credit worthiness of potential
Findings from the survey
assessing loans applications
When asked if they make use of a CRB in assessing loan application, 50% of the institution that responded said that
making the lending decision
When asked on the usefulness of the information provided by
Very useful50%50%
Useful
Usefulness of information provided by
CRB
Banks are evenly split on the value of CRB information
EY - All rights reserved 201416
Lending decision
When asked whether CRB’s can enhance the lending
lending decisions, with only 8% believing it will not
Reduce the amount of non-performing loans
When asked whether they believe that CRB will reduce the
debts, on the understanding that their credit performance is being monitored and will be shared by other banks for credit
Challenges in rolling out CRB’s
In terms of challenges, data quality, level of awareness about credit references, and data suppression feature most
Other challenges likely to be faced are:
•
•
When asked whether the use of CRB’s will lead to more loans
of respondents said yes
Will have no impactNo
Yes
Lending decisions
89%
8%3%
Banks are
lending decisions
95%
5%
Yes No
34%
24%
19%
23%
Data Quality Level of awarenessabout CRB
Absence of law making it mandatory for lendors to use CRB as part of the credit risk assessment
Data suppression
36% said no and 5% said it will have no impact
58%
RespondentsChallenges
Eastern Africa Banking Sector: 17
However, access to CRB date, coupled with projects linked
whether banks will pass the higher costs on to their clients
Micro credit extension
Reduce moral hazard
Reduce borrowing costs
Reduce loan defaults
Enable increased lending @ lower risk
Enhance risk id / monitoring
10.5%
11%
23.5%
21%
20%
13%
Credit reference bureaus are expected to give the Tanzanian
It is anticipated that greater loans will be granted and will assist banks in reducing the number of non-performing
will have the effect of enabling greater economic activity, thus
EY - All rights reserved 201418
Growth across east Africa has so far proved resilient to emerging market turmoil. Slower growth in Rwanda in 2013 was offset by stronger growth in both Kenya and Uganda, while Tanzania’s growth held steady.
East African economies did not experience the currency volatility that knocked many emerging markets in 2013
experienced sharp depreciation in the value of their currencies, which resulted in deteriorating terms of trade and the prospect
However, some of the KURT countries could become vulnerable to external shocks, given that the major contributors to emerging market currency depreciation have been countries
Economic growth: KURT in context of emerging markets
13.3
-55.7
-5.8
-35.3 25.5
-4
-18.5
-7.7
-18.1
-4
-12.3
-6.2
-11.5
-5
-11.3
-2.8
-10.2
-1.8
-8.7
-12.5
-6.2
-8 -6.3
-2.7 -4.7
-6.3 -6.3
-4
-6.4
-4-2.1
-4.4
-6.1 3.3
-3.6
-2.9
-3.4
-1.7
-1.4
-2.9
1.7
0.7
3.7 5.4
-4.9
9.6
-6.2
9.6
5.9
10.8
-2.1
DR
C
Nig
eria
Ang
ola
Gab
on
Zam
bia
Cote
d Iv
oire
Bot
swan
a
Nam
ibia
Mad
agas
car
Uga
nda
Cong
o
Cha
d
Cam
eroo
n
SA
Ethi
opia
Tanz
ania
Gha
na
Sene
gal
Mau
riti
us
Rw
anda
Keny
a
Suda
n
Bur
undi
Mal
awi
Moz
ambi
que
Zim
babw
e
Sier
ra L
eone
FiscalCurrent account
USD in billions
EY - All rights reserved 201420
Gross domestic product
1 4.9% in Kenya;
2 5.5% in Uganda;
3 6.9% in Tanzania; and
4
0
2%
4%
6%
8%
10%
Rwanda
Uganda
Tanzania
Kenya
2010 2011 2012 2013 2014 2015
Eastern Africa Banking Sector: 21
Foreign Exchange Rate (to the US$)
90%
92%
94%
96%
98%
100%
102%
104%
106%
108%
110%
Uganda
Rwanda
Tanzania
Kenya
1/13/2013 2/13/2013 3/13/2013 4/13/2013 5/13/2013 6/13/2013 7/13/2013 8/13/2013 9/13/2013 10/13/2013 11/13/2013 12/13/2013
0
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Rwanda
Uganda
Tanzania
Kenya
2010 2011 2012 2013 2014 2015
EY - All rights reserved 201422
TANZANIA BANKING SECTOR OVERVIEW As at 31 December 2013, the Tanzania Banking Sector had 50 registered banks. Our report excludes one of those banks (FBME).
8 18 20 3large banks regional and small medium banks NBFIs
Eastern Africa Banking Sector: 23
Banking sector growth
17.5%.
Deposits growth was
•
•
•
•
Balance Sheet
Amounts in Tshs million 2010 2011 2012 2013
Cash and Balances with BoT 2 245 488 2 484 500 2 631 542
Balances w/other banks 1 458 686
Investment in Government and Debt Securities 2 030 413
10 211 816
Other assets 1 360 230
Total Assets 9 817 271 12 364 757 14 281 738 16 644 786 18 935 453
Customer deposits 14 411 812
Deposits from other banks
Other liabilities 408 250
Total liabilities 8 568 517 10 845 669 12 543 268 14 507 527 16 359 751
Paid up share capital 644 345
Retained Earnings
185 024
Others
Total Shareholders’ Funds 1 248 755 1 519 089 1 738 471 2 137 260 2 575 702
Total liabilities and Shareholders’ Funds 9 817 272 12 364 757 14 281 738 16 644 787 18 935 453
weaker revenue growth
EY - All rights reserved 201424
On the liabilities side, customer deposits increased 12% (13% in 2012), with shareholders’ funds up somewhat stronger, up 21% (23% in 2012).
Balance Sheet Change over 5 years
% Change 2010 2011 2012 2013
Cash and Balances with BoT 64 18 34 11 6
Balances w/other banks 31 4 -24 -20
Investment in Government and Debt Securities 11 42 38
21 23
Other Assets 31 21 16
Total Assets 19 26 16 17 14
Customer Deposits 24 25 16 13 12
Deposits from other banks -28 101 5 -6
Other liabilities -26 20 25
Total liabilities 17 27 16 16 13
Paid up share capital 31 21 23
Retained Earnings 18 13 16 11
Others 11 -4
Total Shareholder’s Funds 28 22 14 23 21
8% 21% 26%which was particularly acute
lagged asset growth by a considerable margin, rising at a CAGR of
This was despite solid Net Interest Income growth of
This is largely explained by sharply rising bad debts
Eastern Africa Banking Sector: 25
This slower growth stemmed from considerably slower interest income
Provisions for bad debts increased 44%
increase is due to bad debt written off
Fees and commissions increased somewhat slower than what net interest
considerably slower than the 25%
The increase in net income was 8%,
on the back of the sharp rises in credit impairments and the need for larger
Income Statement
% Change 2010 2011 2012 2013
Interest income 16 23 41 18
Interest expense 32 -1 14 15
11 10 25 30
Bad debt provisions and write offs 162 40 -13 44
24 35 16 13
Foreign exchange gain/loss 34 43 6 10
Fees, Commissions and other income
18 31 25 13
Other Income 26 22 -2 -30
Gross Income 10 22 24 15
16 32 23 26 15
Operating Income/(loss) before tax 1 -8 18 14
4 8
11 10 12 5
Income Statement summary over 5 years
Amounts in Tshs million 2010 2011 2012 2013
Interest income 845 300 1 036 533
Interest expense (230 005)
642 884 806 528
Bad debt provisions and write offs (104 612) (126 831) (182 854)
620 411
Foreign exchange gain/loss 145 261 153 833
Fees, Commissions and other income 300 603
Other Income 24 115 28 634
Gross Income
(860 420) (1 083 833) (1 250 562)
Operating Income/(loss) before tax 444 232
Income tax Provision (120 683)
231 024
10 865
EY - All rights reserved 201426
Tanzanian banks undoubtedly faced a tough year in 2013, driven by the need for greater
Tanzania Banking Sector (Total)
2010 2011 2012 2013
Loans and advances to total assets
ROAA
ROAE
Interest margin to average earning assets
Gross loans to deposits
Interest Income to Total Income
Interest Margin
Earning Assets to Total Assets
Total Expenses to Interest Income
income growth pushed returns weaker
•
•
Return on Average Assets and Equity
The sector’s ROAA decreased to
1.6% from 1.7% in 2012. ROAE, dropped to its lowest level in
12.5%% from
14.0% in 2012.
Eastern Africa Banking Sector: 27
continued to deteriorate
Tanzania Banking Sector (Total)
2010 2011 2012 2013
4 348 555
444 461
31 26 28
Portfolio Income per employee
Portfolio Yield
Gross Yield on Earning Assets
Deposit rates
Yield to Rate on Funds
Govt Securities as % Earning Assets
that their cost base is increasing at a faster pace than their
Regional & SmallNBFIsMediumLarge
11%13% 13% 13% 13%
15%16%16%
24%26%
16%
20%
15%17%
16%16%
19%20%
19%
11% 11% 11%13% 14%
2008 2009 2010 2011 2012 2013
EY - All rights reserved 201428
Citibank 5%
BOB, IandM, Habib
Portfolio yields remain in line with 2012 levels, with small banks enjoying the highest yields
Banks with the highest portfolio yield were:
• 32.5%
• 28.4%
• 27.7%
• 26.4%
Advans 54%
Mbinga 48%
Regional & SmallNBFIsMediumLarge
13%
2008 2009 2010 2011 2012 2013
12% 12%11% 11%
13%14%
17%
19%19%
17%
19%
15%
17%
14%
17%
19%
24%
18%
13%
11% 11%
14% 15%
The banks with the highest ratios were:
• 5.9%
• 4.3%
• 3.5%
Regional & SmallNBFIsMediumLarge
2%
2008 2009 2010 2011 2012 2013
-1% -1% -2 -2% -3% -2%1%
-5%-7%1%
-1%-1%-1%-3%1%
-1%
4%
-2%
2%
0% 1%
1%2%
Eastern Africa Banking Sector: 29
Regional & SmallNBFIsMediumLarge
40
2008 2009 2010 2011 2012 2013
16
9
13
9
3
912
-9-9
15
2
14
4
9
46
109
40
32
37
4549
Employee productivity: large banks have the most favourable ratio by a wide margin
small banks recorded negative earnings per employee for the second consecutive year due to a
Once again, there is a
the banks with regards
Citibank recorded the highest earnings per employee in 2013, at Tshs
•
million
• Bank of Baroda Tshs
• Bank M Tshs 73.2 million.
Citibank employees
employee than what fourth ranked Bank M does, although this is no doubt
solely corporate banking positioning
Figure 4: Earnings per employee Tsh millions
Regional & SmallNBFIsMediumLarge
8%
2008 2009 2010 2011 2012 2013
4%
2%
3%
2%
1% 1%2%
-5%-5%
3%
1%
4%
2%
3%3%3%
6%
4%
8%
6% 6%7%
6%6.4%
2.2%
By bank group, large banks lead, with a reading of
This is followed by NBFI’s with
Figure 5: Portfolio income per employee
EY - All rights reserved 201430
Portfolio Quality
Banking sector provisions for bad and doubtful debts stood at TSH 182,854 (TSH 126,831 in 2012) which account for 2% of
By comparing this to the portfolio yield, one gets a third ratio which is yield to rate on funds.
Among the peer groups provision ratios stood at:
•
•
•
•
gap between the highest and lowest cost deposits
between the highest cost of funds and the lowest cost operator, which provides the large low-
10%
0.1%
9%
0.9%
10%
0.6%
8%
0.7%
9% Advans
Maendeleo
Mbinga
NMB
BancABC
UBL
DCB
Citi
Efatha
Eastern Africa Banking Sector: 31
Asset Structure: Investments in bonds rose sharpest in 2013
Deposits increased 12% in
Capital adequacy ratio rose noticeably in 2013Capital adequacy has risen steadily since 2010, in line with banks across the globe, which are often pushed by the regulatory authorities to raise capital levels to provide a buffer against
Tanzania banking sector (total)
Financial soundness ratios % 2010 2011 2012 2013
Total Capital to RWAs
Core Capital to RWAs
Interest Margin to Gross Income
Liquid Assets to Total Assets
Liquid Assets to Deposits
Total Capital to Deposits
Capital Adequacy
Balance sheet 2012 2013 2011 2012 2013
Amounts in Tshs million % Change
Cash and Balances with BoT 2 484 500 2 631 542 34 11 6
Balances w/other banks 4 -24 -20
Investment in Government and Debt Securities
38
Loans, Advances and 10 211 816 23
Other assets 1 360 230 21 16
Total Assets 16 644 786 18 935 453 16 17 14
EY - All rights reserved 201432
Loans and advances represent 54% of total assets (up from 52%
followed by Investments in Government and Debt
2012 2013
Cash and Balances with BoT 15 14
Balances w/other banks 6
Investment in Government and Debt Securities
52 54
Other assets
Total Assets 100 100
Total assets %
2010 2011 2012 2013
Large
Medium 18 21 23 25
3 3 4 3 4
Regional and Small 1 1 2 2 2
Total Sector 100 100 100 100 100
Total assets
Tshs Million 2010 2011 2012 2013
Large 10 565 638
Medium 2 402 536 4 655 804
323 301
Regional and Small 311 561 454 886
Total Sector 9 817 271 12 364 757 14 281 738 16 644 786 18 935 453
Loans, advances and overdrafts make up the largest portion of total assets (54%) followed by
The share of total assets by medium-sized banks increased to 25% (23% in 2012 and 21% in
Regional and small banks’ share of total assets remained unchanged, at 2% in 2013% (2% in 2012 and 2011),
Eastern Africa Banking Sector: 33
Other assets
Loans, Advances &Overdrafts (NET)
Investment in Government &Debt Securities
Balances w/other banks
Cash and Balanceswith BoT
Asset Composition
11%
10%8%
15%
56%
Shareholders Funds
Other Liabilities
Deposits fromother bank
Customer Deposits
FundingComposition
76%
4%
6%
14%
Figure 6: Asset composition
Customer deposits remain the primary source of funding
Regional & SmallNBFIsMediumLarge
2012 2013
73%
2%
23%
2%3%
72%
3%
22%
Two banks dominate the deposit market, accounting for 38.8% of the total
Barclays
Citibank
Stanbic
Exim
Stan Chart
NBC
NMB
CRDB
7%
6%
4%
7%
29%
25%
13%
9%
The large banks dominate customer deposits.
EY - All rights reserved 201434
Share of customer deposits among NBFIs is provided in the chart below.
Figure 11: Share of customers deposits in small and
1%
1%
2%
2%
3%
3%
3%
3%
4%
4%
4%
5%
6%
6%
6%
7%
8%
9%
11%
12%
BOI
FNB
UBA
ICB
Akiba
Equity
BOB
Ecobank
Access
NIC
Habib
BancABC
KCB
I&M
Azania
PBZ
CBA
BOA
Bank M
DTB
TCB
Meru
Advans
Maendeleo
Mbinga
Njombe
Kagera
Efatha
Kili Coop
Mwanga
UBL
Covenant
Uchumi
TWB
Mkombozi
Amana
DCB
0.2%
0.4%
0.9%
1%
1%
1.1%
1.4%
2.1%
2.1%
2.4%
2.5%
%
3.2%
3.7%
4.5%
6.7%
16.5%
22.5%
27.9%
Twiga
TPB
TIB
13%
39%
48%
This leaves very little for the remaining banks – of which the medium sized banks share 23.2% of available deposits
Eastern Africa Banking Sector: 35
in 2013
During 2013, aggregate capital (Total Shareholders’ Funds) increased by 21%, after rising 23% in
Tshs millions 2012 2013 Change in %
Paid up share capital
Retained Earnings
Others
Total Shareholders’ Funds 2 137 260 2 575 702 22.9 20.5
Others
2012 2013
23%
74%
11%
71%
14%
19%
26%
14%
Figure 13: Change in capital structure
17%
18%
Core capital to RWAs remained at
Total capital to RWAs in 2013 remained at
Regional & SmallNBFIsMediumLarge
2012 2013
16%
31%
11%
34%
40%
17%
44%
17%
Figure 14: Total capital to RWAs
10%12%
The ratios are well above the statutory minimum
and
respectively.
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Bank liquidity was slightly lower in 2013
40%
48%
assets stood at
deposits stood at
Regional & SmallNBFIsMediumLarge
2012 2013
44%
38%
35%
40
23%
43%
37%
22%
Financial soundness can also be measured using total capital to total deposits. The sector’s average ratio remained at 16% and is well above the BOT’s statutory
Eastern Africa Banking Sector: 37
Tanzania’s banks faced slower revenue growth, despite economic growth remaining robust, in line with the
As a result, they are able to attract a large chunk of available deposits, and account for a considerable
However, their hold is gradually easing – this is particularly noticeable in their share of sector assets,
From an operational perspective, the large banks
for smaller banks to compete, as their pricing is unlikely to be as favourable as what the large banks
Even within the large bank grouping, there are
in the deposits space, two banks account for 40% of
Similarly, there are major differences between banks, depending on their core focus, even for banks
than any of its peers, and Citi is exclusively focused on
EY - All rights reserved 201438
KENYA BANKING SECTOR OVERVIEW
6 15 21Large banks Medium banks Small banks
In 2013 there were 42 banks operating in
Eastern Africa Banking Sector: 39
Sector assets grew 16%. This is in line with 2012 growth, and indicates that bank assets are growing 3 times faster than GDP.
+37%
17%
+18% +12%Balances with other banks
This in turn supported strong
Loans and advance Investments in Government and debt securities
Balance sheet (Kshs '000)
2011 2012 2013 % Change
Cash and Balances with Central Bank
Balances w/other banks
Investment in Government and Debt Securities
12
18
Other assets 23
Total Assets 2 019 777 395 2 330 059 673 2 700 507 342 16
Customer deposits 13
Deposits from other banks 124 442 355 31
Other liabilities 26
Total liabilities 1 730 775 158 1 967 877 282 2 269 324 684 15
Paid up share capital
Retained Earnings
Others
Shareholders’ Funds 431 182 658
Total liabilities and Shareholders’ Funds 2 019 777 395 2 330 059 673 2 700 507 342 16
Stable but low interest rates supported stronger loans and advances growth in Kenya than its
On the liabilities side, deposits from other banks rose strongest, up 31%, with customer deposits growth considerably slower, up
EY - All rights reserved 201440
Amounts in (Kshs 000) 2013
2011 2012 2013 % Change
Interest income 182 031 132 0
Interest expense (84 433 124) -24
164 502 855 16
Bad debt provisions and write offs (10 224 352) -4
6
Foreign exchange gain/loss -3
Fees, Commissions and other income 45 856 140 12
Other Income 12 462 865 -2
Gross Income 14
(140 421 123) 12
Operating Income/(loss) before tax 16
Income tax Provision 1
64 168 415 88 158 100
nonetheless. Interest margins remain robust, again even by emerging
during the year.
Kenya Banking Sector (Total)
2012 2013
Loans and Advances to Total Assets
ROAA
ROAE
Interest Margin on Average Earning Assets
Gross Loans to Deposits
Interest Income to Total Income
Interest Margin
Earning Assets to Total Assets
Total Expenses to Interest Income
64 168 415
All but three banks reported
Consolidated, and UBA recorded annual losses on a
Eastern Africa Banking Sector: 41
Return on average assets and equity
economies
Regional & SmallMediumLarge
2012 2013
4.2%
2.9%
1.6%
4.3%
2.9%
1.4%
Regional & SmallMediumLarge
2012 2013
27%
20%
11%
25%
20%
9%
Highest reported ROAA’s:
•
•
•
•
•
ROAE for 2013 was 22.2%. In line with ROAA, large banks lead in ROAE, reporting a 25.3% return, followed by medium banks with a 20.4% return.
EY - All rights reserved 201442
Regional & SmallMediumLarge
2012 2013
15%
13%
16%
12%
17%
22%2013 were:
•
• CFC, and Standard Chartered 10%
•
were:
•
•
•
Kenya Banking Sector (Total)
2012 2013
Loan Portfolio (Kshs 000)
Portfolio Income per employee
Portfolio Yield
Gross Yield on Earning Assets
Deposit rates
Yield to Rate on Funds
Govt Securities as % Earning Assets
Eastern Africa Banking Sector: 43
Portfolio yield
Small banks enjoy the largest portfolio yield, although the gap is narrow
Regional & SmallMediumLarge
2012 2013
16%
21%
19%18%
15%17%
Banks with the highest portfolio yield:
•
•
•
•
The banks with the highest ratios:
•
•
•
•
Regional & SmallMediumLarge
2012 2013
3% 3%
1%
4%
2%
-1%
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Deposit rates
Figure 21: Deposit rates Large banks attract funds at much lower costs than what smaller banks do
Regional & SmallMediumLarge
2012 2013
4%
5%
6%
9%
8%
3%
The graph below illustrates that large banks pay less than half the rate that small banks need to
Banks paying the highest rates were:
•
•
•
•
Banks paying the lowest deposit rates were:
•
•
•
0.8% of net loans.
Portfolio QualityProvisions stood at Kshs 11, 758 (12,311 million in 2012) accounting for
Eastern Africa Banking Sector: 45
Overview
Kenya banking sector (total)
Financial soundness ratios % 2012 2013
Total Capital to RWAs
Core Capital to RWAs
Interest Margin to Gross Income
Liquid Assets to Total Assets
Liquid Assets to Deposits
Total Capital to Deposits
Capital Adequacy
Asset structure overview
Balance sheet (Kshs '000)
2012 2013 Change in %
Cash and Balances with Central Bank 6
Balances w/other banks
Investment in Government and Debt Securities
22
Other assets
Total Assets 2 330 059 673 2 700 507 342 100
2013 4.2%and by global standards, Kenyan banks remain well capitalised.
this follows a benign 2012.
jump in NPL’s to again in
Capital adequacy
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Total assets %
2012 2013
Large
Medium
Regional and Small
Total Sector 100 100
Figure 22: Asset composition Loans and advances make up the major asset category – by a wide margin
other assets
Loan, advancesand Overdrafts
(NET)
Investment in governmentand Debt Securities
Balances w/ other banks
Cash and balances with central bank
AssetsComposition
22%
7%
57%
7% 7%
Eastern Africa Banking Sector: 47
(followed by core capital at 12%)
Large banks account for half of all customers deposits
OthersRetained Earnings
Paid up share capital
Other liabilities
Deposits fromother banks
Customer depositsBanks source
of Funding
72%
5%
7%
3%
9%4%
Funding (liabilities) analysis
Regional & SmallMediumLarge
2012 2013
52%
40%
10%10%
38%
50%
Financial soundness
Amount in (Kshs ‘000) 2012 2013 Change in %
Paid up share capital 20
Retained Earnings 54
Others 26
Total Shareholders’ Funds 431 182 658 100
16% 18% (22% in 2012) (25% in 2012)
Core capital to RWAs stood at Total capital to RWAs was
EY - All rights reserved 201448
Figure 25: Total capital to RWAs
Liquidity analysis
Regional & SmallMediumLarge
2012 2013
25%
17%
23%
25%24%
18%
Regional & SmallMediumLarge
2012 2013
35%
38%39%
41%40%
34%
Financial soundness is also measured by total capital
The average ratio was
Three Banks with the lowest ratios were:
•
•
•
Eastern Africa Banking Sector: 49
Kenyan banks – like their peer banks across the KURT region, can largely be assessed by the size of
from scale economies, have greater reach across more business lines and product markets, and hence
Kenyan banks are growing at three times the rate
the region, and could be at least partly due to the
played, incorporating growing numbers of adults into
However, small banks recorded an overall rise in
gains, moving considerably closer to their medium and
sometimes paying less than half of what smaller and medium sized banks need to pay in order to attract
EY - All rights reserved 201450
UGANDA BANKING SECTOR OVERVIEW
8 6 11Large banks Medium banks Small banks
In 2013 there were 25 banks operating in Uganda, made up of:
Eastern Africa Banking Sector: 51
Balance Sheet
2012 2013 % increase
Amounts in Ush million
Central Bank balance 4
Balances w/other banks 1 062 116
Investment in Government and Debt Securities
3 060 368
5
Other assets 1 332 382 1 559 533 17
Total Assets 15 327 614 17 256 139 13
Customer deposits 10 468 099 11 375 778 9
Deposits from other banks 469 456 650 612 39
Other liabilities 1 699 676 2 362 004 39
Total liabilities 12 637 230 14 388 395 14
Paid up share capital 982 569 1 235 708 26
Retained Earnings 1 298 918 1 317 585 1
-159 168 -124 944 +22
Others 568 064 439 395 -23
Shareholders’ Funds 2 690 383 2 867 744 7
Total Shareholder’s Funds 15 327 614 17 256 139 13
EY - All rights reserved 201452
Income Statement summary over 2 years
Amounts in Ush million 2012 2013 % change
Interest income 2 006 243 -5
Interest expense (551 410)
1 413 253 -5
Bad debt provisions and written offs (205 533) -11
11
Foreign exchange gain/loss 184 554 115 752 -37
Fees, Commissions and other income 370 628 387 198 4
Other Income 22 642 140 446 520
Gross Income 1 785 545 1 808 332 1
Non-interest expense (1 055 628) (1 214 168) 15
Operating Income/(loss) before tax 729 917 594 164 -19
Income tax Provision (152 994) (25 232) -84
Net Income after Income Tax 545 712 423 896 -22
sharply in the 2nd half of 2012, the impact was acutely felt across the banking sector in 2013, with
Driven by the modest growth in Loans and advances, and a benign interest rate environment,
a considerable decrease in net income, of 22%
Eastern Africa Banking Sector: 53
Uganda banking sector (total)
2012 2013
Loans and Advances to Total Assets
ROAA
ROAE
Interest Margin to Average Earning Assets
Non-Interest Expense to Gross Income 40.9 47.8
Gross Loans to Deposits 72.6 69.9
Interest Income to Total Income 77.6 74.7
Interest Margin 70.4 71.0
Earning Assets to Total Assets 76.6 77.6
Net Interest Margin 21.7 17.3
Total Expenses to Interest Income 82.2 93.0
30% 46.1% 77.6%Nearly Loans and advances account for
just under half of total assets Earning assets to total assets stood at
a slight increase from 2012. of Ugandan banks recorded losses in 2013
Of the 25 registered banks in Uganda
in 2013, while 7 banks reported losses, namely; BOA, Ecobank, Fina, GTB, Imperial, Orient, and UBA.
EY - All rights reserved 201454
Large banks feel the least pressure from the lower interest rates
SmallMediumLarge
2012 2013
5%
1%-2%-3%%
2%
4%
SmallMediumLarge
2012 2013
30%
3%-10%-13%
13%
22%
Banks reporting the highest ROAA’s:
•
•
•
The sector achieved an overall
and for the same reasons cited above, large banks reported considerably higher ROAE’s than what medium
Uganda banking sector (total)
2012 2013
Loan Portfolio (UGshs Million)
Staff Income to Portfolio
Portfolio Yield
Gross Yield on Earning Assets
Deposit rates 5.2 4.5
4.1 1.4
Yield to Rate on Funds 18.0 15.0
Govt Securities as % Earning Assets 26.1 26.8
Eastern Africa Banking Sector: 55
economies of scale
Portfolio yields shrunk for both large and small banks during 2013
interest income (%) loans and advances portfolios
levels, driven by the above cited declining interest rates which took effect in the latter half of 2012,
SmallMediumLarge
2012 2013
18% 18%
21%
29%
19%18%
SmallMediumLarge
2012 2013
25%
18%16%
21%19% 20%
2013 were:
•
• BOI 11%
• Citibank and DTB 12%
Banks with the highest portfolio yield were:
•
•
•
• GTB 46%
• FTB 38%
EY - All rights reserved 201456
Deposit rates: there is a considerable gap between the highest and least cost deposits
countries, customer deposits make up the bulk of borrowed funds
The banks with the highest ratios were:
•
•
•
In terms of bank
banks reported a strong
reported a marginally positive ratio and small banks a
SmallMediumLarge
2012 2013
7%
1%-6%-8%-1%
3%
11%
1.8%
11%
2.1%
Fina and HFB
Stanbic
DTB
Citibank and Barclays
require stronger provisions into 2014
Provisions for bad and doubtful debts stood at Ush 182,3bn
Eastern Africa Banking Sector: 57
Capital adequacy ratios were lower than 2012’s but remain healthy
Uganda banking sector (total)
Financial soundness ratios % 2012 2013
Total Capital to RWAs
Core Capital to RWAs
Interest Margin to Gross Income
Liquid Assets to Total Assets
56.3 63.8
Total Capital to Deposits 23.7 23.6
17.6 16.6
Asset structure: bank assets are used primarily for lending and purchasing bonds
9%Other assets
14%Cash and Balances
with central bank
10%Balances w/other banks
21%Investment in Government
& Debt Securities
46%Loans, Advances & Overdrafts (NET)
Total Assets by asset class
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Large banks dominate the banking market, as they do across most countries, with their share of
Funding (liabilities) structure: deposits’ share of total assets fell two percentage points
Balance sheet
Ush millions 2012 2013
Customer deposits
Deposits from other banks 650 612
Other liabilities 2 362 004
Paid up share capital
Retained Earnings
Others 568 064
Total liabilities and Shareholders’ Funds
SmallMediumLarge
2012 2013
76%
19%
8%6%
18%
73%
66%
12%Customer deposits accounted for the bulk of funds
Total funding stood at Ush 17,256 billion in 2013, a increase of
Eastern Africa Banking Sector: 59
Large banks attract in excess of 70% of total deposits
shareholder fund growth
Balance sheet
Ush millions 2012 2013
Paid up share capital
Retained Earnings
Other 568 064
Total Shareholders’ Funds
SmallMediumLarge
2012 2013
76%
19%
8%6%
18%
73%
7% 26%During 2013, aggregate capital (Total Shareholders’ Funds) increased by
In relation to Risk Weighted Assets (RWAs), the sector average for core capital to RWAs was
EY - All rights reserved 201460
Small banks hold proportionally greater capital levels
Liquidity analysis: small banks are more liquid than their larger peers
SmallMediumLarge
2012 2013
28%
21%
44%44%
21%
30%
64% deposits ratio stood at
SmallMediumLarge
2012 2013
44%
36%
50
40%
34%
47%
Eastern Africa Banking Sector: 61
in that interest rates remained at very low levels – by
The challenging operating environment in turn
greater attention, going forward, to operating in a
more or less steady – at historical low levels and there
There was a strong uptick in non-performing loans
Uganda’s banks were squeezed hard to improve capital adequacy in 2013, and the CAR was lower than 2012’s
EY - All rights reserved 201462
RWANDA BANKING SECTOR OVERVIEW
5 4 1Large banks Medium banks Small bank
In 2013 there were 10 banks operating in Rwanda, made up of:
Eastern Africa Banking Sector: 63
Growth in assets stemmed mainly from balances with banks, up 93% and investment in government and debt securities, up 66%.
Balance Sheet
Amounts in Rwf millions 2012 2013 % Change
Cash and Balances with central bank
Balances w/other banks
Investment in Government and Debt Securities
148 426 66
35
Other assets -66
Total Assets 1 164 672 1 305 390 12
Customer deposits 10
Deposits from other banks 13 116 -52
Other liabilities
Total liabilities 975 402 1 086 897 11
Paid up share capital 5
Retained Earnings 21 848 458
158
Others 86 625
Shareholders’ Funds 189 270 218 493 15
Total Shareholders’ Funds and liabilities 1 164 672 1 305 390 12
On the liabilities side, customer deposits increased slightly slower than asset growth, at 10%, while
EY - All rights reserved 201464
Income Statement Items Snapshot
Amounts in Rwf million 2012 2013 % Change
Interest income 100 031
Interest expense 40
-23
Bad debt provisions and write offs -3 331 -54
54 553 38 018 -30
Foreign exchange gain/loss
Fees, Commissions and other income -28
Other Income 5 315 -56
Gross Income 128 583 -24
-24
Operating Income/(loss) before tax 33 351 25 063 -25
Income tax Provision -1 683
25 200 14 800 -41
Coupled with this sharply slower interest income, non-interest revenue also experienced a sharp
Eastern Africa Banking Sector: 65
2012 2013
Loans and Advances to Total Assets
ROAA
ROAE
Interest Margin to Average Earning Assets
Gross Loans to Deposits
Interest Income to Total Income
Interest Margin
Earning Assets to Total Assets
Total Expenses to Interest Income
EY - All rights reserved 201466
SmallMediumLarge
2012 2013
3%
1%
5%
-4%
2%
1%
SmallMediumLarge
2012 2013
17%
6%
27%
-15
13%
7%
Tanzania Banking Sector (Total)
2012 2013
Loan Portfolio (RWF million)
Portfolio Income per employee
Portfolio Yield
Gross Yield on Earning Assets
Deposit rates 3.1 3.9
-2.2 -1.0
Yield to Rate on Funds 13.8 7.0
Govt Securities as % Earning Assets 12.2 13.9
4.9%
3.8%
2.7%
High performing banks on ROAA are Zigama
IandM
Access
ROAE for 2013 was 7.3% (14.2% in 2012)
Eastern Africa Banking Sector: 67
the sector were:
•
•
•
•
•
SmallMediumLarge
2012 2013
20%17%
54%
36%
17%
7%
Portfolio yield: unlike other markets, smaller banks in
Small banks have the highest portfolio yield
SmallMediumLarge
2012 2013
19%
15%
50%
22%
14%
7%Banks with the highest portfolio yield:
•
•
•
EY - All rights reserved 201468
The banks with the highest ratios:
•
•
In terms of peer groups, all showed a negative portfolio
SmallMediumLarge
2012 2013
-1% -2% -4%-14%-2% 0%
Deposit rates
deposit cost banks, as illustrated below:
8.7%
1.0%
5.9% 5.6%
1.8% 2.8%BOK
GTB KCB
Access
The least expensive deposits:
Portfolio quality: bad debts remain low
Provision for bad and doubtful debts stood at Rwf 3 331,
Eastern Africa Banking Sector: 69
noticeably in 2013
Tanzania banking sector (total)
Financial soundness ratios % 2012 2013
Total Capital to RWAs
Core Capital to RWAs
Interest Margin to Gross Income
Liquid Assets to Total Assets
Liquid Assets to Deposits
Total Capital to Deposits
Capital Adequacy
Asset structure: loans as a portion of total assets rose sharply during the year
Balances sheet structure % 2012 2013
Cash and Balances with central bank 10 10
Balances w/other banks 15
Investment in Government and Debt Securities 8 11
46 56
Other assets 8
Total Assets 100 100
Total Assets % 2012 2013
Large
Medium
Small
Total Sector 100 100
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Figure 42: Asset composition
Funding (liabilities) structure: customer deposits form the bulk of deposits
Balance Sheet
Rwf millions 2012 2013 %
Customer deposits
Deposits from other banks 13 116
Other liabilities
Paid up share capital
Retained Earnings 21 848
158
Others 86 625
Total Shareholders’ Funds
Other assets
Loans, Advances &Overdrafts (NET)
Investment in Government &Debt Securities
Balances w/other banks
Cash and Balanceswith BoT
Asset Composition
11%
10%8%
15%
56%
66%67%
Total funding remains strongly reliant on customer deposits, in line with other KURT countries, making up
of total funds (slightly down from
in 2012)
Eastern Africa Banking Sector: 71
SmallMediumLarge
2012 2013
68%
33%
4%3%
29%
63%
Figure 43: Funding composition
Large banks dominate the deposits market
Customer deposits
Retained Earnings
OtherLiabilities
Paid upshare capital
Retained EarningsOthers
FundingComposition
8%
66%
1%
16%
7%2%
EY - All rights reserved 201472
SmallMediumLarge
2012 2013
20%
25%
20%
27%
24%25%
SmallMediumLarge
2012 2013
26%
31%
27%
22%
28%
39%
Financial soundness
Liquidity rose sharply in 2013
The banking sector’s liquidity rose sharply, with liquid-to-total-
liquid-assets-to-deposits ratio was similarly much higher, at 48% (35% in 2012)
By bank type, there was a noticeable difference between the bank types in 2013, with large banks being the most liquid, and
22% 25%Core capital to RWAs stood at
(19% in 2012) (22% in 2012)
Total capital to RWAs
Furthermore,
has also been measured using capital to deposits. The sector’s average ratio was marginally up at 22.6% (21.8%.)
to total assets
Figure 45: Total capital to RWAs
Eastern Africa Banking Sector: 73
Rwanda’s banking sector differs from that of its neighbouring markets in that the smaller banks are
larger banks are not as dominant, holding just under
2013 was a tough year for the sector, with slow
Asset growth slowed in 2013, but nevertheless
EY - All rights reserved 201474
KURT BANKING SECTOR ANALYSIS
49 42 25 10Tanzania Kenya Uganda Rwanda
There are a total of 126 banks covered in this KURT banking
three times larger than Tanzania’s, the latter nevertheless leads by numbers:
Eastern Africa Banking Sector: 75
Strong economic growth supports asset growth, but falling
Total KURT banking sector assets amount to US$ 52 billion, with Kenya holding the largest
Total assets billion USD 2012 2013 % Change
Kenya 31 288 464 16
Uganda 6 826 112 20
Rwanda 4
Tanzania 13
Total 45 230 613 15
Kenya
Tanzania
Uganda
Rwanda
27%
11%
6%
1%
EY - All rights reserved 201476
Loans and advances to total assets
Kenya has the highest Loans and Advances to Total Assets ratio, indicating that a greater portion of
KURT Banking Sector
Kenya Uganda Rwanda Tanzania Average
Portfolio Yield
Gross Yield on Earning Assets
Yield to deposit rate
•
•
• Uganda’s banks also feature the highest Gross yield on earning assets
• Tanzanian banks pay the lowest deposit rates
Uganda
Tanzania
Rwanda
Kenya
46%
54%
56%
57%
Eastern Africa Banking Sector: 77
Kenya’s banks are able to deploy a greater proportion of their assets to lending, as a result of which,
contend with low and declining interest rates, but were able to absorb the impact of lower interest
KURT Banking Sector
Kenya Uganda Rwanda Tanzania Average
Loans and Advances to Total Assets
Income
ROAA
ROAE
Interest Margin to Average Earning Assets
Income
Gross Loans to Deposits
Interest Income to Total Income
Interest Margin
Earning Assets to Total Assets
Total Expenses to Interest Income
EY - All rights reserved 201478
Figure 49: ROAA Kenya’s banks earned the highest returns in the region
Financial soundness
KURT Banking Sector
Financial soundness ratios % Kenya Uganda Rwanda Tanzania Average
Total Capital to RWAs
Core Capital to RWAs
Gross Interest Margin
Liquid Assets to Total Assets
Liquid Assets to Deposits
Total Capital to Deposits
Capital Adequacy
•
•
•
•
Rwanda
Tanzania
Uganda
Kenya
1.2
1.6
2.6
3.5
Eastern Africa Banking Sector: 79
Whilst Rwandan banks are the best capitalized, that comes at
assets deployed to earning productive returns – in the form of
Their small size also limits the Rwandan banking sector’s
the largest economy of the four countries, has the most mature banking market in the region, and is able to absorb
result, Kenya remained the most lucrative banking market in
However, growth opportunities remain sizeable in all four
to GDP, Rwanda undoubtedly has the most opportunity to extend the reach of banking products and services across its population, given that there is only 13 US cents of bank
Kenya
Tanzania
Uganda
Rwanda
Market maturity bank assets to GDP
0.133
0.233
0.342
0.612
EY - All rights reserved 201480
BoT Bank of Tanzania
BoU Bank of Uganda
CBK Central Bank of Kenya
CRB Credit Reference Bureau
Govt Government
Kshs Kenyan Shillings
PandL
ROAA Return on Average Assets
ROAE Return on Average Earnings
RWA Risk Weighted Assets
Rwf Rwandese Franc
Tshs Tanzanian Shillings
Ushs Ugandan Shillings
following is the full list with their abbreviations used:
Tanzania
1 Access Access Bank (T) Limited
2 Advans Advans Bank (T) Limited
3 Akiba Akiba Commercial Bank Limited
4 Amana Amana Bank Ltd
5 Azania Azania Bank Ltd
6 BancABC African Banking Corporation (T) Ltd
Bank M Bank M (T) Limited
8 Barclays Barclays Bank (T) Limited
BOA BOA Bank (T) Limited
10 BOB Bank of Baroda (T) Limited
11 BOI Bank of India (T) Limited
12 CBA Commercial Bank of Africa td
13 Citibank Citibank (T) Limited
14 Covenant Covenant Bank for Women (T) Ltd
15 CRDB CRDB Bank PLC
16 DCB Dar es Salaam Community Bank
DTB Diamond Trust Bank (T) Limited
18 Ecobank Ecobank (T) Limited
Efatha Efatha Bank
Eastern Africa Banking Sector: 81
20 Equity Equity Bank Tanzania Ltimited
21 Exim Exim Bank (T) Limited
22
23 Habib Habib African Bank Limited
24 IandM IandM Bank (T) Limited
25 ICB International Commercial Bank (T) Limited
26 Kagera Kagera Farmers Co-operative Bank Ltd
KCB Kenya Commercial Bank (T) Limited
28 Kili Coop Kilimanjaro Co-operative Bank
Maendeleo Maendeleo Bank PLC
30 Mbinga Mbinga Community Bank Ltd
31 Meru Meru Community Bank
32 Mkombozi Mkombozi Commercial Bank PLC
33
34 Mwanga Mwanga Rural Community Bank Ltd
35
36
38
40 Stan Chart Standard Chartered Bank (T) Limited
41 Stanbic Stanbic Bank (T) Limited
42 TCB Tandahimba Community Bank
43 TIB Tanzania Investment Bank Ltd
44 TPB Tanzania Postal Bank Ltd
45 TWB Tanzania Women’s Bank Plc
46 Twiga Twiga Bancorp Limited
UBA United Bank for Africa (T) Limited
48 UBL United Bank Limited (T) Limited
Uchumi Uchumi Commercial Bank Ltd
Kenya
1 ABC African Banking Corporation Limited
2 Barclays Barclays Bank of Kenya
3 BOA Bank of Africa Kenya Limited
4 BOB Bank of Baroda (K) Limited
5 BOI Bank of India
6 CBA Commercial Bank of Africa
CfC CfC Stanbic Bank Limited
8 Chase Chase Bank (K) limited
Citibank
EY - All rights reserved 201482
10 Co - op Co-operative Bank of Kenya Limited
11 Consolidated Consolidated Bank of Kenya Limited
12 Credit Credit Bank Limited
13 DBK Development Bank of Kenya Limited
14 DTB Diamond Trust Bank (K) Limited
15 Ecobank Ecobank Kenya Limited
16 Equatorial Equatorial Commercial Bank Limited
Equity Equity Bank Limited
18 Family Family Bank
Fidelity Fidelity Commercial Bank Limited
20 Fina Fina Bank Limited
21 First First Community Bank Limited
22 Giro Giro Commercial Bank Limited
23 Guardian Guardian Bank Limited
24 Gulf Gulf African Bank Limited
25 Habib Habib Bank Limited
26 Habib AG
Housing Housing Finance Company Limited
28 IandM IandM Bank Limited
Imperial Imperial Bank Limited
30 Jamii Jamii Bora Bank Limited
31 KCB Kenya Commercial Bank
32 K-Rep K-Rep Bank Limited
33 Middle Middle East Bank Limited
34
35
36 Oriental Oriental Commercial Bank Limited
Paramount Paramount Universal Bank Limited
38 Prime Prime Bank Limited
STD Standard Chartered Bank (K) Limited
40 Trans
41 UBA UBA Kenya Bank Limited
42 Victoria Victoria Commercial Bank Limited
Uganda
1 ABC ABC Capital Bank Limited
2 Barclays Barclays Bank Uganda Limited
3 BOA Bank of Africa - Uganda Limited
4 BOB Bank of Baroda
5 BOI Bank of India (Uganda)
Eastern Africa Banking Sector: 83
6 Cantenary Centenary Rural Development Bank Limited
CBA Commercial Bank of Africa (U) Limited
8 CIB Cairo International Bank Limited
Citibank Citibank Uganda Limited
10 Crane Crane Bank Limited
11 DFCU DFCU Bank Limited
12 Diamond Diamond Trust Bank Uganda Limited
13 Ecobank Ecobank Uganda Limited
14 Equity Equity Bank Uganda Limited
15 Fina Fina Bank Uganda Limited
16 FTB Finance Trust Bank Limited
GTB Global Trust Bank Limited
18 HFB Housing Finance Bank
IBU Imperial Bank Uganda Limited
20 KCB KCB Bank Uganda Limited
21
22 Orient Orient Bank Limited
23 Stan Chart Standard Chartered Bank Uganda Limited
24 Stanbic Stanbic Bank Uganda Limited
25 Tropical Tropical Bank Limited
26 UBA United Bank for Africa (Uganda) Limited
Rwanda
1 Access Access Bank Rwanda Ltd
2 BOK Bank of Kigali Ltd
3 BPR Banque Populaire du Rwanda
4 BRD Banque Rwandaise de developpement
5 Cogebanque Cogebanque Ltd
6 Ecobank Ecobank Rwanda Ltd
Equity Equity Bank Rwanda
8 GTB Guaranty Trust Bank Rwanda Ltd
IandM IandM Bank Ltd
10 KCBR Kenya Commercial Bank Rwanda
11
EY - All rights reserved 201484
•
•
increase/decrease in loan portfolio over the period under
•
• again theoretically, how much each staff has contributed to the bank’s earnings
•
show how much each staff has contributed on average to the
higher ratio has more productive staff
•
be at least equal to (and preferably better than) the bank’s
from non-lending sources)
• Assets: Shows the gross interest income earned from all
• Basically this gives the average deposit interest rate paid by
may include interest on other borrowed funds)
• the Portfolio Yield (6) minus the result of the Operating
• extent Earning Assets are made up of Government Securities (as opposed, for example, to loans and advances)
• as a % of total assets
• the returns generated by the bank’s assets
• show the return to Shareholders from the bank’s operations
•
• much non-interest expense would ‘eat’ into interest income especially if interest income was the bank’s only income
main source of income to cover other major (non-interest) expenses
• to which non-interest expense would ‘eat’ into total income
•
• which interest income is the bank’s major source of income (as it should be)
•
bank’s interest policy
• of the bank’s assets and if most of them are earning assets
earning assets
•
earned by the bank on its loans and advances
• to which the bank’s interest income covers total expenses if, hypothetically, assuming that interest income was the bank’s only source of income
•
bank’s net interest earnings made up total earnings
The following ratios were used in the supplement:
Eastern Africa Banking Sector: 85
Financial soundness ratios
•
better managed the portfolio
• Exposures (%): Shows the degree to which creditors are
•
•
• from total capital on all the bank’s Deposits
the review may be limited by the level of detail of information
the ratios:
•
account
• Total Capital = Total shareholder’s funds
• Off Balance Sheet Exposures = Contingent liabilities
•
a percentage of the total capital of a bank, which is also
assets*100
•
short maturity period (less price sensitive to interest rate
of bank assets are cash, reserves, securities (Government
EY - All rights reserved 201486
EY AFRICA
However, like all the large professional services organizations,
country (and even city) practices ran independently, were
often disconnected and had different capability and service-
on a structured process of integrating all of its Sub-Saharan
Eastern Africa Banking Sector: 87
EY STRATEGIC GROWTH FORUM™
Africa 2014: realizing the possibilities
South Africa
This will be the third Strategic Growth Forum (SGF) hosted on
on the strategic growth opportunities that the continent offers and the challenges that need to be addressed to
previous editions, SGF Africa has established a reputation as an unparalleled opportunity to network, share ideas and challenges, and learn from those who are doing business and
Among the key topics that will be explored this year:• Africa 2030
• Building capabilities for growth in Africa
• Realizing Africa’s human potential
• The future of infrastructure in Africa
• Innovation
• Financing Africa’s growth and development
• African success stories
more information on the venue, accommodation, registration
Today, we are able to navigate through the complexity that our
Its sole purpose is to help clients make their investment and
clients through:
• across Africa and the rest of the world, enabling us to coordinate our resources to provide clients with a single point of contact
• Pre-eminent thought leadership and events such as the Africa attractiveness survey, the Strategic Growth Forum Africa and the Africa Tax Conference
• — an interactive map-based tool that visually maps data through the lens of the continent’s geography
• A proven methodology for supporting the development of growth strategies for Africa
EY AFRICA
EY - All rights reserved 201488
Country Name Email
Algeria Philippe Mongin philippe.mongin@fr.ey.com
Angola
Botswana Bakani Ndwapi bakani.ndwapi@za.ey.com
Cameroon Joseph Pagop joseph.pagop.noupoue@cm.ey.com
Chad Joseph Pagop joseph.pagop.noupoue@cm.ey.com
Congo Ludovic Ngatse ludovic.ngatse@cg.ey.com
Cote d'Ivoire Jean-Francois Albrecht jean-francois.albrecht@ci.ey.com
DRC Lindsey Domingo lindsey.domingo@cd.ey.com
Egypt Emad Ragheb emad.ragheb@eg.ey.com
Erik Watremez erik.watremez@ga.ey.com
Ethiopia Zemedeneh Negatu zemedeneh.negatu@et.ey.com
Gabon Erik Watremez erik.watremez@ga.ey.com
Ghana Ferdinand Gunn ferdinand.gunn@gh.ey.com
Guinea Conakry Rene-Marie Kadouno rene-marie.kadouno@gn.ey.com
Kenya Gitahi Gachahi gitahi.gachahi@ke.ey.com
Libya Waddah Barkawi waddah.barkawi@jo.ey.com
Madagascar Gerald Lincoln gerald.lincoln@mu.ey.com
Malawi Shiraz Yusuf shiraz.yusuf@mw.ey.com
Morocco El Bachir Tazi bachir.tazi@ma.ey.com
Mauritius Gerald Lincoln gerald.lincoln@mu.ey.com
Namibia Gerhard Fourie gerhard.fourie@za.ey.com
Nigeria Henry Egbiki henry.egbiki@ng.ey.com
Rwanda Allan Gichuhi allan.gichuhi@rw.ey.com
Senegal Makha Sy makha.sy@sn.ey.com
Seychelles Gerald Lincoln gerald.lincoln@mu.ey.com
South Africa Ajen Sita ajen.sita@za.ey.com
South Sudan Patrick Kamau patrick.kamau@ss.ey.comw
Tanzania Joseph Sheffu joseph.sheffu@tz.ey.com
Tunisia Noureddine Hajji noureddine.hajji@tn.ey.com
Uganda Muhammed Ssempijja muhammed.ssempijja@ug.ey.com
Zambia Tim Rutherford tim.rutherford@za.ey.com
Zimbabwe Walter Mupanguri walter.mupanguri@zw.ey.com
Eastern Africa Banking Sector: 89
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