Equity Bank staff numbers declined by 660 last year in what the lender attributed to natural attrition, pointing to a gloomy job market in the financial sector.
With the continued growth in the agency banking model, Equity Bank reported a four-per cent decline in staff costs to Sh10.3 billion from Sh10.8 billion with management expecting a further five per cent drop this year.
“This year we benefited from a four per cent drop in staff costs reduction because natural attrition saw 660 staff exit. This year we expect a reduction on staff cost by five per cent,” said Equity Bank’s chief executive James Mwangi.
The bank announced three years ago that it was freezing staff recruitment and letting natural attrition take its course when it adopted agency banking model.
Contracted agents conducted 51.3 million transactions valued at Sh341.5 billion last year more than the 23.8 million transactions done by bank tellers.
The bank has 23,885 agents. Mr Mwangi said the financier has about 9,000 employees.
Mobile banking platform is expected to further automate the bank’s operations, especially lending business, which will lead to loss of more jobs.
As at end of last year the bank conducted 151 million transactions through mobile platform. It processed 1,922,000 loans through the mobile platform more than three times the 533,000 loan applications disbursed by credit officers in branches.
The financial institution said it has been deploying staff to offer other services within the bank such as selling insurance under the bancassurance model.
Mr Mwangi disclosed that the bank was conducting 700,000 transactions daily on its Equitel platform of which 300,000 were financial-based transactions -— referring to those relating to transfer of cash.
Non-financial transactions include account balance enquiries and mini-statement requests.
This is the first time a bank has reported a drop in staff cost not associated with a restructuring programme indicating hopes of improved efficiency within the sector and which is expected to lead to lower fee charges and interest rates.
Banks have however been accused of failing to pass on the benefits of automation to their customers, especially through lower interest rates.
The Central Bank of Kenya (CBK) has introduced innovative banking models, such as the agency model, in an effort to cut operation costs for the lenders which had been cited as the key drivers of high financial service fees.
Automation casts a dark cloud on the job prospects of fresh university graduates, with the banking sector having been a key source of employment.
As per the CBK, the number of employees in the sector has increased to 36,923 from 30,056 five years ago. The employee growth has however been at a slower pace than the increase in bank customers owing to automation.
Several other banks have announced staff restructuring in the recent past, including the Co-operative Bank which cut 140 jobs in late 2014, with National Bank of Kenya retiring 200 employees the same year.
The Kenyan job market has been gloomy with harsh economic conditions resulting in companies cutting jobs, freezing new recruitments and halting bonus payouts.
Steel manufacturers have been hardest hit due to drop in commodity prices and influx from China resulting in more than 20,000 job cuts.