(+) BANKS ARE RESPONDING TO REDUCED MARGINS
The Kenyan banking industry has been under pressure to enhance operational efficiencies to cut costs. Sidian Bank projects a 40 per cent hit on its earnings this financial year. On September 14, NIC Bank CEO John Gachora said there is no question that efficiency has to come into play, especially with reduced margins. He, however, expressed optimism that interest controls will bring more customers to the banks – not just to borrow but also to save. Analysts have said large banks are better positioned to weather the interest caps storm due to economies of scale, building a case for consolidation among smaller lenders in the near to medium term. Britam chief executive officer Kenneth Kaniu on September 27 said large banks will be able to adjust easier to interest rate capping relative to smaller banks. He noted smaller banks tend to deal more with niche market which has higher risk borrowers.