East African Banking Sector’s Remarkable Growth and Competition
Subtitle: A Closer Look at the Top 20 Banks in the Region
In the heart of East Africa, the banking sector is witnessing unprecedented dynamism. Banks in this region are not only expanding across borders into neighboring countries but also relentlessly pushing the boundaries of the industry. They face fierce competition not only from each other but also from telecommunications giants like Safaricom and Airtel as they strive to dominate the realm of mobile banking and financial services. Most of this captivating financial action unfolds in the highly competitive Kenyan market, often hailed as the investment gateway to the region. Remarkably, Kenya alone contributes 10 banks to the coveted top 20 ranking in East Africa.
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Banks across East Africa have been on an upward trajectory, with profits steadily climbing. This can be attributed to the twin forces of inflation and rising interest rates. However, they face headwinds due to fluctuations in the exchange rates, particularly in the Kenyan shilling and Ethiopian birr compared to the US dollar, as well as the Ugandan and Tanzanian shillings to a lesser extent.
Leading the pack is Equity Bank of Kenya, retaining its top position with Tier 1 capital of $1.5 billion, assets worth $11.7 billion, and profits reaching $364 million. Following closely is the KCB Group, another Kenyan powerhouse. Both these banks operate at the group level, encompassing assets beyond their home countries. KCB’s in-country entity, Kenya Commercial Bank, would stand as the largest bank in Kenya alone with a capital of $718 million.
Ethiopia, a nation in the midst of rapid economic liberalization, boasts four banks in East Africa’s top 20 list. The state-owned Commercial Bank of Ethiopia leads the charge with Tier 1 capital of $929 million and profits amounting to $304 million. Awash International Bank, while increasing its Tier 1 capital to $299 million, slightly drops from its previous ranking of #13 to #14 in the regional hierarchy. Dashen Bank, on the other hand, boosted its Tier 1 capital from $192 million to $282 million, securing an ascent from #17 to #15.
The banking landscape in Ethiopia is poised for significant changes as the nation progressively opens its doors to foreign competition, aligning with a policy endorsed by the Council of Ministers in September 2022. Talks of potential acquisitions by both African and international banks are rife, and in May 2023, Kenya’s Safaricom was granted a mobile money license, further intensifying the competition.
Uganda contributes three banks to the regional rankings, an increase from the previous year’s two. Standard Chartered Bank Uganda secures the #19 spot with Tier 1 capital of $219 million and net profits of $27 million. Stanbic Bank Uganda ascends to #11 with Tier 1 capital rising to $367 million and profits amounting to $99 million. Meanwhile, Centenary Rural Development Bank, Uganda’s second-largest bank with Tier 1 capital of $251 million, displaces DFCU Bank to enter the regional top 20 at #16. Centenary Bank focuses on education, environmental health, financial literacy, and the social mission of the Catholic Church. In March 2023, it achieved a significant milestone by obtaining a banking license in Malawi, marking the first cross-border expansion of a Ugandan bank.
Tanzania maintains its position with two banks in the regional ranking, while Rwanda is represented by one bank, mirroring the previous year’s figures. A testament to the region’s robust banking sector is the remarkable growth in the baseline, as the Tier 1 capital of the bank ranked #20 has surged to $210 million, up from $159 million in 2022.
The Top 100 Banks survey ranks these financial institutions based on their Tier 1 capital, which encompasses capital, reserves, retained earnings, and minority interests. These figures are reported in local currencies and are then converted into US dollars using year-end exchange rates. It’s worth noting that fluctuating FX rates can influence the ranking.
The data for this survey is sourced from Bankers’ Almanac, Moody’s Analytics BankFocus, and the in-house research of African Business. In cases where data is outdated or unreliable, certain banks have been excluded. Below, you’ll find the list of the top 20 banks in the East African region, along with their positions in the continental ranking.
shegeronline.com is to deliver the highest quality information to our readers. To ensure that, all of our information is reviewed at least once (by an editor) and sometimes twice (by a subject matter expert). We will always strive to provide you with the most accurate and useful information