Tier 1 Banks in Kenya have been around for a while now and have seen many changes. These banks are the ones that control most of the financial activity in the country. They offer full banking services to their customers, as well as other financial products such as loans and insurance. In this blog post, we will take a look at Tier 1 Banks in Kenya and see what they can do for you.
There are 9 tier 1 banks in Kenya as follows:
- Equity Bank
- Kenya Commercial
- Cooperative Bank
- Absa Bank Kenya PLC
- NCBA Bank Kenya
- Standard Chatered Bank
- DTB Bank
- Stanbic Bank
- I & M Holdings
Classification of Banks in Kenya
The Central Bank of Kenya (CBK) is the institution mandated to regulate the banking industry in Kenya. According to CBK, Kenyan banks are classified into three categories:
1. By Ownership
In this category, the banks are classified as either owned by local individuals and companies or foreign organizations and individuals.
2. Nature of the Bank
Under this category, banks are classified as either commercial or microfinance banks.
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3. Classification Based on Assets
Under this classification, CBK classifies banks as either tier 1, tier 2, or tier 3. Tier 1 are large banks with hundreds of billions in cumulative assets. Additionally, these are banks with millions of depositors. The asset basis of tier 1 banks are so deep that any failure would have a devastating effect on the country’s economy. In case of such a phenomenon, the government must intervene to avert an economic crisis.
Tier 2 are medium-sized banks while tier 3 is made up of small banks. At the moment, Kenya has a total of 42 banks (28 domestic and 14 foreign).
Having established this basis, let’s now look at tier 1 banks in Kenya
1. Equity Bank
Equity Bank Kenya was founded in October 1984 and it tops the list of tier 1 banks in Kenya. Initially, the bank operated as Equity Group Holdings but was restructured in 2014 into Equity Bank.
Equity banks top the list of tier 1 banks in Kenya due to the advancements it has made in recent years. Through these advancements, the bank has increased its clientele base across the country. It now has more depositors than any other bank in Kenya. The factor that propelled the bank to the top is the development of e-banking platforms like Equitel and Eazzy Banking App. Furthermore, the company helping hand through its wings to fly program won the bank the hearts of many Kenyans. The head office is in Upper Hill Nairobi, Equity Center, along hospital road.
2. Kenya Commercial Bank (KCB)
KCB banks ranks number two among tier 1 banks in Kenya. The bank is one of the oldest banks in Kenya having been established back in 1896. Digital incorporation played a key role in getting the bank among the top tier 1 banks. Through the inception of KCB Mpesa services, many people could afford some KCB banking services on their phones. These won the hearts of many Kenyans who wanted an easy way to access their finances without making long cues in banking halls.
Moreover, KCB focused on taking its services closer to the people by introducing the KCB Mtaani services. Through this, many people could access KCB bank services without going to the bank. As a result, many Kenyans decided to bank at KCB bank. Their headquarter is at Kencom Nairobi.
3. Cooperative Bank of Kenya
The Cooperative Bank of Kenya is also among the oldest banks in Kenya having been established in 1965. Being among the largest commercial banks in East Africa, Co-op bank has a large clientele base of 7.9 million accounts in Kenya alone. This was made possible by the digitization approach enacted by the bank. Through the MCoop Cash app and Co-op kwa jirani, the bank has been able to reach many people. Through these and other marketing practices, the bank has established an asset base worth Ksh. 404.1 billion. The head office is in Nairobi, Cooperative house along Haile Selassie Avenue.
4. Absa Bank Kenya PLC
Absa Bank Kenya PLC (formerly Barclays bank) is also one of the tier 1 banks in Kenya. The bank has been operating in Kenya for more than 100 years and has established a huge client base. Absa has more than 200 ATMs countrywide and it provides both online and offline baking services. In terms of online banking, the bank has both mobile and internet banking services. Absa Bank has an asset base of Ksh. 374.109 billion. It’s headquartered at Absa Westend Building off Waiyaki Way, Nairobi.
5. NCBA Bank of Kenya
NCBA Bank Kenya PLC is another tier 1 bank in Kenya. Getting into the tier 1 list was necessitated by the merger between the Commercial Bank of Africa (CBA) with NIC bank in 2017. The merger gave rise to NCBA bank.
6. Standard Chartered Bank
Standard Chartered Bank (Stanchart Bank) started its banking services back in 1910. Stanchart Bank is among the tier 1 banks in Kanya and has branches across East Africa. Through enacted services like online banking and international payments, the bank increased its clientele base in Kenya. This saw the bank’s assets skyrocket to Ksh. 220.39 billion excluding shareholder’s equity.
7. DTB Bank
Diamond Trust Bank (DTB) is among tier 1 banks in the country with branches in Kenya, Tanzania, Uganda, and Burundi. To make it to the top 10 tier 1 banks in Kenya, DTB partnered with Habib Bank and the Aga Khan Fund for Economic Development. Through these initiatives, the bank’s gross NPL ratio went to 4.6%. In comparison, the industry average is 11.5%.
8. Stanbic Bank
Stanbic is among the tier 1 banks in the country having been incorporated in 2008. The establishment of Stanbic Bank was due to the merger between CFC Bank and Stanbic Bank Kenya Limited. The digitization of some of the services offered by this bank played a major role in seeing the bank among the top 10 tier 1 banks in Kanya. Through its partnership with SimbaPay, Stanbic Bank was able to allow its customers to transact internationally. Moreover, the bank has mobile banking application services.
9. I & M Holdings
This bank originated from Investments & Mortgages Limited which started banking services in 1980. Through the continuous improvements in its banking services by adopting the online transactions, I & M holdings made it to tier 1 in 2019. This was after being ranked position 8 in the country. In 2019, I & M holdings had an asset base of Ksh. 261 billion and shareholder’s equity of more than Ksh. 44 billion. Other factors that contributed to I & M’s better performance are its take over of Giro Bank and the location across East African countries.