(Last Updated On: April 29, 2014)
What is return on assets? This is an indicator of how profitable a company is relative to its total assets. This shows how efficient the management is using its available asset to generate earnings.
In Kenya, Equity bank had the best return on asset based on it performance last year. The return on assets stood at 8 per cent while its biggest rival KCB had a return on assets of 5.7 per cent.
Equity bank has been able to achieve this high number due to their very successful agency model which provided them with cheap deposits which were converted into loans. They were able to achieve the highest loan to deposit ratio in the industry of 98 per cent.
Equity bank has s smaller asset base than KCB (Equity’s sh238 billion vs KCB Group’s sh323 billion) yet they were able to out-perform the giant.
When it comes to efficiency, Standard Chartered ruled over them all with a ratio of 1.9 while Equity had 1.8.
Kenyan Banks Return on Asset (%)
1. Equity – 8
2. Stanchart – 6.4
3. KCB – 5.7
4. Barclays – 5.71
5. Co-orperative – 5
6. CFC Stanbic – 4.6
Most small banks had a ratio of 3% while others negative due to losses made.