Bank accounts with over Sh100,000 hit 1.9 million

NCBA headquarters in Upper Hill, Nairobi. 

Photo credit: File | Evans Habil | Nation Media Group

The number of bank accounts in Kenya holding more than Sh100,000 grew by 4.9 percent to 1.871 million last year, handing banks cheaper working capital in a year where depositors were hunting for higher returns.

The rise was from 1.783 million accounts held in 2021 and they point to improving the fortunes of individuals and firms in an electioneering year that is characterised by increased spending.

At the same time, an analysis of the data from the Central Bank of Kenya (CBK) reveals a significant flight by high-quality accounts from smaller banks to larger ones as depositors sought safety following the collapse of several banks in recent years.

The CBK data showed that commercial banks continued to hold the bulk of the high-deposit accounts at 1.847 million compared to micro-finance banks which held just 24,257 large deposit accounts.

Bank deposit accounts with more than Sh100,000 rose at a faster pace after they grew by 5.1 percent in the 12 months to December, offsetting the 3.5 percent decline in total deposit accounts or a respective 64.02 million accounts.

In contrast, microfinance banks also took a hit from capital flight, shedding 3.8 percent of their high-quality depositors over the same period after the number of accounts with more than Sh100,000 shrank from 25,221 accounts.

By the close of the period, tier-1 lenders held more than three-quarters of the accounts at 1.534 million accounts or a respective 83 percent of all the high-value accounts, tightening the grip in the financial industry.

KCB, NCBA and Stanbic Bank led the way in the accumulation of high-value depositors among the large banks, registering a year-on-year growth of 11, 10.1 and 7.5 percent respectively.

Mid-sized lenders Bank of Baroda, Family Bank and Prime Bank saw their high-quality accounts jump by 8.1, 7.7 and 7.5 percent respectively.

On the flip side, small banks have shed 3.4 percent of the high-value accounts with the number of deposit accounts holding more than Sh100,000 in tier-3 banks falling to 110,702 from 114,588.

Kingdom Bank, DIB Bank and Victoria Commercial Bank were the outliers in the group, registering a 33.7, 23.7 and 14.2 percent rise respectively in the high-value accounts.

Microfinance banks suffered a similar fate as small commercial banks losing 3.8 percent of accounts with more than Sh100,000 as high-value depositors moved their cash to larger banking institutions.

Victoria Commercial Bank holds the largest share of high-value accounts as a percentage of total deposits with 75.71 percent of its deposit accounts holding Sh100,000 or more.

Other banks with a majority of high net worth accounts include Citibank Kenya (73.11 percent), Bank of India (66.42 percent), Habib Bank A.G. Zurich (62.99 percent) and Bank of Baroda (62.51 percent).

The five banks have a common type of clientele as they cater to either corporate clients or high-net-worth individuals.

Among the large banks, I&M, Standard Chartered and Stanbic Bank hold the largest share of high-value accounts as a percentage of total deposit accounts at 29.44 percent, 26.12 percent and 17.74 percent respectively.

NCBA holds the least share of high-value accounts as a percentage of total deposit accounts among the large banks even as it commands the largest share of deposit accounts in the industry.

Combined, accounts with more than Sh100,000 are just 2.8 percent of all deposit accounts that tallied to 67.1 million in 2022.

The total number of deposit accounts, however, continued to drop for a second straight year as banks closed a further 1.9 million accounts in the year.

While the CBK report does not give reasons for the contraction in deposit accounts, the drop is traceable to banks closing dormant customer accounts over the period.

Commercial banks held the bulk of deposit accounts at 64 million while micro-finance banks had 3.1 million deposit accounts.

In total, 65.2 million deposit accounts held less than Sh100,000 at the end of December 2022.

While the number of deposit accounts declined last year, customer deposits in the banking sector rose by 12.3 percent to hit Sh5 trillion from Sh4.5 trillion in December 2021 as banking institutions leveraged alternative deposit acquisition methods such as digital channels.

“The growth in deposits was due to deposit mobilisation through agency banking and mobile phone platforms,” the CBK stated.

Nine of Kenya’s largest banks held more than three-quarters of all customer deposits or Sh3.736 trillion, handing them a combined market share of 74.76 percent.

Microfinance banks nevertheless shed 7.8 percent of their deposits in the same period as the institutions were cannibalised by higher-yielding asset classes.

“The decline in deposits was due to the transfer of funds to alternative attractive investments due to the overall increase in interest rates,” the CBK added.

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