The Banking industry in Kenya is governed by the Companies Act, the Banking Act, the Central Bank of Kenya Act and the various prudential guidelines issued by the Central Bank of Kenya (CBK).


The banking industry in Kenya is governed by the Companies Act, the Banking Act, the Central Bank of Kenya Act and the prudential guidelines issued by the Central Bank of Kenya (CBK).

The CBK is responsible for formulating and implementing monetary policy and fostering the liquidity, solvency and proper functioning of the financial system.

According to CBK for the financial year ended 30 June 2020, Kenya had 41 commercial banks, 1 mortgage finance company, 14 microfinance banks, 9 representative offices of foreign banks, 69 foreign exchange bureaus, 19 money remittance providers and 3 credit reference bureaus.

The banks have come together under the Kenya Bankers Association (KBA), which serves as a lobby for the banking sector’s interests. The KBA serves a forum to address issues affecting members.

PwC employees discussing the banking industry in Kenya

Over the last few years, the Banking sector in Kenya has continued to growth in assets, deposits, profitability and products offering.

Over the last few years, the Banking sector in Kenya has continued to growth in assets, deposits, profitability and products offering.

Key issues facing the banking industry in Kenya

COVID-19 pandemic

The global COVID-19 pandemic has resulted in:

  • restructuring of a significant portion of loans to customers,
  • low credit growth,
  • business failures, job losses and a rise in credit defaults – industry non-performing loans stood at 13.6% as of August 2020,
  • lower fee and commission income resulting from the waiver of restructuring and mobile transaction fees in this period as directed by the CBK,
  • a struggling property market with very low volumes of property sales and expected lower occupancy of commercial property,
  • a shift in customer behavior and expectation necessitated by the restrictions resulting from the pandemic,
  • heightened cyber security threats, and
  • lower productivity as a result of measures to protect employees, suppliers and other service providers, including implementing working from home and using virtual meetings as much as possible.


Strategy rethink and cost containment

The cost to income ratio for most Kenyan banks is above 50% with the main costs relating to employee benefits, technology and other infrastructure costs. With the shift in customer behaviour and lower incomeas a result of the COVID-19 pandemic, banks are having to rethink their strategies to ensure that they emerge from the pandemic as more robust organisations that are fit for growth.

The rethink includes re-focusing on customers as well as upskilling employees to the work force of the future.

Increasing competition from fintechs

There has been increased competition from fintechs which are presently not licensed by the CBK and therefore have greater flexibility in the business that they conduct

Risk and regulations

A number of new regulations/requirements have been issued in recent years including:

  • The Kenyan Data Protection Act 2019 (the “Act”) was assented to by the President on 8th November 2019, giving effect to Article 31 of the Constitution, which recognizes the right to privacy. The Act, which commences on 25th November 2019, represents a “big bang” in terms of data protection in Kenya and is primarily centred upon the collection, handling, transfer and destruction of data.
  • Financial institutions have had to evolve with the dynamic nature of money laundering and this explains why a risk-based approach cannot be over emphasised. Today, Anti Money Laundering (AML) and Countering the Financing of Terrorism (CFT) is a key concern across all continents.
  • All institutions are required to develop an ICAAP policy that ensures that overall internal capital levels are adequate and consistent with their strategies, business plans, risk profiles and operating environments on a going concern basis. CBK will review and evaluate the soundness of institutions’ ICAAP as part of its riskbased supervisory process through the Supervisory Review and Evaluation Process(SREP).
  • Various tax amendments including: Minimum tax based on turnover, Digital services tax, Reduction of the corporate tax deductions available to corporate bodies, Income tax exemptions reduced, Tax depreciable machinery and equipment exempted from capital gains tax, Voluntary Tax Disclosure Programme.

In addition, transition from the globally accepted interest rate benchmark known as the London Inter-bank Offered Rate (“LIBOR”).

Mergers and acquisitions

The sector has witnessed a number of recent mergers including:

  • Merger of Commercial Bank of Africa Ltd and NIC Bank PLC to form NCBA Bank Kenya PLC on 5 November 2019,
  • acquisition of Transnational Bank Plc by Access Bank Plc of Nigeria on 24 December 2019,
  • Co-operative Bank’s acquisition of Jamii Bora which completed in 21 August 2020,
  • Equity Group acquisition of BCDC (DRC’s second larget bank) effective 7 August 2020, and
  • KCB Group, East Africa’s largest banking group, acquired 100% of National Bank of Kenya Ltd by KCB Group PLC on 2 September 2019. The group recently announced that it is in xx to acquire Rwanda’s Bank Populaire xx (BPR) and Tanzania’s BancABC with the transactions expected to complete next year.

Banking industry icon

The role of PwC in the banking industry

PwC has extensive experience in serving the Banking sector in the African region and in Kenya in particular. Through our involvement in a large number of audit and non-audit assignments, including strategic and regulatory initiatives that influence the future of the sector, we have developed an in-depth knowledge of the sector which we apply to all our client relationships.

PwC is involved with the CBK, the Kenya Bankers Association and a number of the major players.

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Promoting excellence in financial reporting

PwC is a proven thought leader and an advocate of good corporate governance and financial reporting in the region. Our success in this area is demonstrated by the success of our audit clients in the annual FiRe (Financial Reporting) awards presented by the Institute of Certified Public Accountants of Kenya (ICPAK). The FiRe awards have the primary objective of promoting excellence in financial reporting, corporate governance and corporate social responsibility among Kenyan corporate organisations.

We have an enviable client base in the banking sector in Kenya, which enables us to continually refresh our knowledge of the sector and to benchmark practices and controls across sector players.



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Contact us

Richard Njoroge

Richard Njoroge

Partner, PwC Kenya

Tel: +254 (20) 285 5604

Brian Ngunjiri

Brian Ngunjiri

Partner, PwC Kenya

Tel: +254 (20) 285 5310

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