Economists have predicted more consolidation of banks in Kenya in the foreseeable future due to the tough operating environment for small banks.
According to analysts from Cytonn Investments, consolidation will help in stabilizing the banking industry and catalyze economic growth.
Plans are at an advanced stage for NIC Bank merging operations with Commercial Bank of Africa.
KCB has also proposed to acquire National Bank of Kenya.
Already Central Bank of Kenya Governor Dr Patrick Njoroge has projected that there could be more mergers in the country, a view that analysts from Cytonn Investments agree with.
The investment analysts say mergers of smaller banks with large ones are the best way to capitalize on players.
These unfolded during the release of the first quarter 2019 report about listed banks by Cytonn Investments that shows the industry had a positive trajectory boosted by a recovery in interest revenue, largely supported by the asset re-allocation to government securities, and increased lending to specific segments.
According to the report, Equity Bank topped the list of listed banks in Return on Average equity at 22.8 per cent, KCB 22.4 per cent, Co-operative bank 18.3 per cent while NBK and HF had a dismal performance at 11.3 per cent and 7.2 per cent respectively.