Banks wage bill shot up by Sh1 billion in the first quarter of this year compared to a similar period last year, with analysts saying the benefit of job cuts and branch closures recently common in the sector is wearing off.
Financial reports filed by the lenders show they spent Sh25.9 billion in employee remuneration in the three-month period, which was a 4.3 percent increase on the Sh24.8 billion spent in the first three months of last year.
The lenders have in the last three years turned to aggressive cost cutting in order to mitigate the lower interest margins following the enactment of the rate cap law.
They are still competing for prime talent, however, especially in ICT where most of them are making significant investments to take advantage of the digital shift in finance.
“We believe that for most banks, efficiency gains from adoption of technology, cutting of redundant staff has bottomed out. Moving forward we do not see cost cutting as key theme in earnings performance,” said Dyer & Blair Investment Bank head of research Edwin Chui in a review of banks’ quarter one performance.
Most of the growth in the cumulative wage bill is down to SBM Bank, whose employee costs went up from Sh81 million in quarter one of 2018 to Sh446 million this year.
The Mauritian lender saw a significant jump in the size of its Kenyan operation on completing the acquisition of certain assets and deposits of Chase Bank in August last year.
Previously it had a relatively smaller footprint, having entered the market with the acquisition of Fidelity Bank in 2017.
Standard Chartered Bank also recorded significant increase in wages, going from Sh1.61 billion to Sh1.84 billion.
Several large banks also saw an increase in wage bills. KCB’s #ticker:KCB bill was up by Sh181 million to Sh4.63 billion while Co-operative bank’s #ticker:COOP employee cost went up by Sh147 million to Sh2.78 billion.
Commercial Bank of Africa recorded a Sh104 million rise in employee costs to Sh1.16 billion. On the other hand, Barclays Kenya #ticker:BBK was able to cut its wage bill, by Sh5418 million to Sh2.34 billion.