EQUITY Bank will be the biggest beneficiary of the planned exit of Barclays Plc in Africa and has positioned itself to reap from the sale, CEO James Mwangi has said.
Mwangi says conflicting statements from UK-based Barclays Plc and Barclays Bank Kenya on the imminent sale has left customers unsure about the future.
“Where we are on that issue is uncertainty, and uncertainty in the financial sector is a bad thing,” he said.
Barclays Bank Plc announced this month that it will sell its 62.3 per cent stake in Barclays Africa – the majority shareholder of Barclays Kenya – owing to regulatory changes that have made the business unprofitable to shareholders.
Last week, Kenya Commercial Bank Group CEO Joshua Oigara said the bank was open to opportunities arising from the planned exit of Barclays, adding that consolidation of the industry into fewer, stronger banks was the way to go.
Investment management firm Cytonn has projected that Equity Bank and KCB stand to be the biggest beneficiaries of the impending sale.
"This will increase the strength of other tier I banks, namely Equity and KCB, which over time have displaced foreign banks such as Standard Chartered, Barclays and Citi from their perch as the key provider of banking solutions," Cytonn said.
Equity CEO Mwangi spoke at an investor briefing in which he announced Equity Group's 2015 profit after tax growth was nearly flat at Sh17.3 billion from Sh17.2 billion made in 2014. It cited a difficult macroeconomic environment with regional currencies performing poorly in 2015, turmoil in South Sudan which saw its currency devalued by 84 per cent due to political tensions and a rise in treasury bills.
The bank's mobile banking platform Equitel, launched last July, recorded total transactions worth Sh114.9 billion from Sh4.7 billion previously. The number of transactions done via Equitel rose from 13.7 million to 151 million last year.
“Our mobile strategy is a channel; my worry is that Kenya has been turned into a gambling nation, by whipping up emotions, instead of rational thinking about mobile money," Mwangi said.
Transactions through its agents rose by 35 per cent to reach 51.3 million. Equity Bank plans to push retail clients out of its banking halls to its mobile banking platform Equitel and agents.
“What we now see is the bank beginning to retire the old brick and mortar mode of banking, and transacting on the mobile. Our branches will then be open for SMEs and large corporates who were previously discouraged by the long queues,” Mwangi said.
Equity's staff costs dropped from Sh10.8 billion to Sh10.3 billion. The bank said it is targeting a further five per cent cut in staff costs this year.
Operating expenses rose 39 per cent largely due to investment in IT where the bank spent Sh8 billion on system upgrade.
Customer deposits grew to Sh302 billion from Sh245.4 billion. Net interest income grew by 17 per cent to Sh34.1 billion, while total assets grew by 24.1 per cent to Sh428.1 billion.
The bank has declared a dividend of Sh2 per share, raising it from the previous year’s Sh1.8 per share.