Kenyan banks seek niches as competition mounts
NAIROBI, Sept 3 (Reuters) - Kenyan banks are targeting new customers at both ends of the market as they face a wave of competition from Islamic lenders and African rivals.
Kenya has more than 40 banks, nine of which are listed on the Nairobi bourse. The arrival this year of two new Sharia-compliant firms, Gulf African Bank and First Community Bank, has increased the number of players in a crowded market.
The appearance of Pan-African group Ecobank (ETIT.LG) in June has also made waves in a sector full of small players that experts say is ripe for consolidation.
"A good number of banks are rediscovering the retail customer and seeing that as a source of profitability," said David Ferrand, head of the Financial Services Deepening Trust.
"This has brought the need for differentiation, the realisation that one size doesn't fit all," he told Reuters.
His organisation is a donor-funded body that supports the development of financial markets in Kenya to reduce poverty.
As a result of the competition, it says, the average cost of operating a current account in east Africa's biggest economy fell nearly 12 percent in the nine months to December 2007.
Trying to draw the country's most wealthy clients, along with a chunk of the fast-growing middle class, Barclays Bank of Kenya BARC.NR launched its Premier Banking centre in July.
Located in Nairobi's most up-market shopping mall, it offers luxurious surroundings, concierge services, high-tech conference rooms and a play area for children.
But it doesn't come cheap. Members must make at least 300,000 shillings ($4,360) a month, or have deposits of more than 3 million shillings. Barclays chief executive Adan Mohammed concedes they are targeting a small part of the market.
RURAL MODEL
This month Kenya's biggest bank in terms of assets posted first-half profit up 21 percent at 4.29 billion shillings.
At the other end of the market, Equity Bank (EQTY.NR) is aiming for the less affluent customers who make up more than half the population, with its low-margin, high-volume model.
Equity, which began life as a small rural building society in central Kenya, is now home to 48 percent of all bank accounts in the country and says it expects to see a 200 percent rise in pretax profit this year. Continued...
