Nairobi, Kenya, 24 Sept –Customer deposits on Kenyan banks are on the rise despite the COVID-19 pandemic, signaling the banks’ resilience and efforts to operate and remain relevant by adopting digitalization, Deloitte has revealed.
The East Africa Banking Industry Trends 2021/2022 publication themed, ‘Fortifying Resilience’, noted that the banks witnessed an 8.9 percent growth from USD 34.3 billion in 2019 to USD 37.3 billion in 2020, with the first quarter of 2021 registering a further increase to USD 38.8 billion.
“Customer deposits in the Kenyan banking industry continued to rise, witnessing an 8.9 percent growth from USD 34.3 billion
in 2019 to USD 37.3 billion in 2020, with the first quarter of 2021 registering a further increase to USD 38.8 billion,” the report which was released Thursday noted.
The report, however, noted that gross loans and advances remained low compared to the growth in customer deposits.
“It is expected that given the stable macro-economic environment and the increasing customer deposits; banks will increase lending in the future,” it added.
Overall, the report noted that banks in East Africa experienced a reduction in client transactions and amounts in bank collection accounts as businesses faced a downtime in operations leading to a reduction in the number of funds available for banks to invest and lend.
It noted that most banks, therefore, diversified their income streams by offering additional services including bancassurance, letters of credit and guarantee, agency banking, and custodial and merchant services.
“Although all income streams have shown a significant decline in amounts of revenue collected in terms of commission, banks that offered these services were better cushioned against large losses compared to banks that did not provide for these services,” the report noted.
Timothy Machira, Deloitte East Africa Financial Institutions Services Team (FIST) Senior Manager urged banking institutions to take advantage of the opportunities that arise from economic shocks and plan for financial and operational challenges that will most likely thrive and outperform their peers.
“Banks’ strategic focus should be on taking advantage of these opportunities and having in place, measures to mitigate adverse consequences of the anticipated challenges,” the report noted.