CBA jumps to second biggest retail lender on M-Shwari accounts boost

The number of deposit accounts in the country have crossed the 20 million mark boosted by the uptake of M-Shwari, a joint product of the Commercial Bank of Africa (CBA) and mobile phone company Safaricom.

The sharp increase in M-Shwari account holders has made CBA Kenya’s second largest retail lender after Equity Bank.

New CBK data shows that the number of deposit accounts rose by 2.15 million in the three months to September to stand at 21.1 million. The jump has been attributed to the introduction of M-Shwari, a mobile-phone based bank account launched last year. Its uptake has seen CBA’s deposit accounts as at September surpass five million up from 34,884 in 2011, to leave it second only to Equity Bank which hosts over seven million accounts.

“There was increased uptake of banking services as evidenced by the number of bank deposit accounts which increased from 18.97 million in June to 21.12 million in September representing a growth of 2.15 million accounts or 11.3 per cent,” said CBK.

This was the fastest growth in deposit accounts by an industry whose profitability continued to reach new heights after it posted Sh92.5 billion for the nine months to September compared to Sh80.8 billion last September.

Customer savings however grew at a slower pace of 2.7 per cent to Sh1.91 trillion, indicating the new accounts are of small savers, consistent with mobile money users. CBA said some of M-Shwari subscribers can now access loans of up to Sh8,000 based on their saving trends on the mobile platform. CBA has displaced Co-operative bank, KCB and Family Bank on its rise up the retail ladder.

“The numbers keep growing. We have now crossed the five million mark and giving up to 30,000 loans a day,” said CBA’s chief executive Jeremy Ngunze.

KCB also hopes to record a similar success with its recently launched M-benki services, in which it has collaborated with Safaricom to see the mobile firm’s subscribers open bank accounts with it from their handsets. KCB aims to open three million accounts in the next 12 months using the service.

The lenders are hoping to increase their transaction income from the high number of clients to help them ease their reliance on interest income.
Financial inclusion in the country has been deepened by uptake of mobile money, of which Kenya is a global leader. Latest financial inclusion survey shows that formal banking inclusion is at 35 per cent, despite the number of deposit accounts being more than half the country’s total population. This underscores the culture of customers being multiple account holders.

“You have to bear in mind those who have multiple accounts as the financial inclusion statistics cover individuals,” said Mr Ngunze.

Formal financial inclusion which includes the banks, alternative channels such as mobile technology and other institutions such as Saccos and deposit taking microfinance institutions is at 67 per cent.

The industry loaned out Sh67.8 billion in the three months with its loan book growing to Sh1.52 trillion. However 5.2 per cent of the loan book is considered non-performing with the borrowers exceeding three months without servicing the debt.

Profitability of the industry even in a year when the economy experienced a lull attributable to the general election is expected to continue rising, stoking debate about the sector’s regulation and leeway in pricing of loans whose interest income is the main source of revenue.
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