in the 21st Century

Transformation of Kenya’s Banking Sector, 2000–2012 45
2012. Overall, while banks in Kenya have generally experienced growing
balance sheets since 2000, banks in the LPOB segment have pursued strategies
that have either increased or maintained their proportionate share of total
assets. In the sections that follow, we discuss the portfolio characteristics of the
segments at a broad level and then discuss each segment in detail.
Figure 14: Share of segments, 2000, 2005 and 2012
100
90
11.2% 11.2%
15.4%
Percent
80
70
60
50
40
19.7%
25.5%
30.0%
18.4%
34.5%
17.3%
SPOB
LPOB
GOB
30
FOB
20
10
43.6% 40.4%
32.8%
0
2000 2005 2012
Source: Authors’ calculations from bank financial statements.
4.2 Portfolio characteristics of segments, 2000 to 2012
We now discuss the portfolio characteristics of the different segments of the
banking sector in Kenya. The dataset used for this analysis is individual bank
balance sheets, with two data points: average for 2000–2005 and then 2012. 39
The indicators we focus on are return on assets, ratio of capital to risk weighted
assets, ratio of loans to total assets, ratio of government securities to total
loans, total loans on total deposits, non-performing loans and cost of funds. 40
Table 8, Figure 15 and Figure 16 show the portfolio characteristics of the
segments and the changes in these characteristics between 2000–2005 and
2012.
39 It should be noted that before 2000, banks followed different reporting standards and therefore financial statements
are not comparable.
40 Cost of funds is calculated as interest on customer deposits plus interest on borrowed funds divided by total deposits
plus borrowed funds.