Sector financial data shows employee costs for the whole industry rose by Sh2.96 billion to hit Sh72.7 billion in the period, with top-tier lenders accounting for the bulk of the increase.
The rise in costs at a time banks were reducing the actual headcount indicates the lenders are still competing fiercely for top talent, which is deemed key in driving revenue growth in a tough operating environment.
The expenses, however, include the cost of laying off workers, meaning that the lenders are likely to see a positive impact on their balance sheets next year.
Bank employee costs rose by 4.3 per cent in the nine months to September despite the lenders shedding nearly 2,000 jobs in the wake of the rate-cap law and accelerated technology upgrades.
Sector financial data shows employee costs for the whole industry rose by Sh2.96 billion to hit Sh72.7 billion in the period, with top-tier lenders accounting for the bulk of the increase.
The rise in costs at a time banks were reducing the actual headcount indicates the lenders are still competing fiercely for top talent, which is deemed key in driving revenue growth in a tough operating environment.
The expenses, however, include the cost of laying off workers, meaning that the lenders are likely to see a positive impact on their balance sheets next year.
In October, the banking sector lobby Kenya Bankers Association (KBA) revealed in a survey that its members had cut 1,933 jobs between August 2016 and the end of June this year, attributing this to the adjustment to the reality of the rate cap.
“The law has promoted adjustments in the banking industry in the form of staff and network rationalisation.
From the surveyed banks there has been a 1,933 jobs reduction as the number of management and non-management staff reduced from 28,009 employees as at August 2016 to 26,076 employees by June 2017,” said the KBA in the survey that covered 77 per cent of the banking industry.
KCB maintained the largest wage bill in the nine- month period at Sh13.8 billion, having increased by 11 per cent or Sh1.4 billion.
The lender with the highest percentage increase in wage costs was M-Oriental, up 40.5 per cent to Sh179 million.
Victoria Commercial Bank, Bank of India and Commercial Bank of Africa increased employee costs by 32.6, 17 and 15 per cent respectively to Sh232 million, Sh217 million and Sh3 billion.
Among the other large lenders, Equity Bank #ticker:EQTY cut its costs by 10.7 per cent to Sh7.8 billion, while the wage costs of Standard Chartered #ticker:SCBK and Co-operative Bank #ticker:COOP went up by 10 and 8.3 per cent to Sh5.17 billion and Sh7.2 billion respectively.
Banks have also been outsourcing services to agents, saving millions in the process.
