GROUP 4 STRATEGIC MANAGEMENT PRESENTATION

Kenya Commercial Bank is a non-operating holding company that offers a wide range of
banking, insurance, and other financial products and services.

SWOT analysis of Kenya Commercial Bank (KCB) along with an assessment of impacts and
strategic responses:

SWOT Analysis of Kenya Commercial Bank

SWOT Analysis, which stands for Strengths, Weaknesses, Opportunities, and Threats, is an
analytical framework that identifies the internal and external factors that are favorable and
unfavorable for a company.
Strengths:
1. Market Leaders: KCB is one of the largest banks in East Africa, with a significant
market share and branch network across Kenya and other parts of African countries
2. Diversified Services: KCB offers a wide range of products to cater to their customers'
needs, including retail banking, corporate banking, and investment services.
3. Strong Brand: KCB has established a brand recognized across the country and has
customer loyalty in the Kenyan market.
4. Technological Investment: KCB has invested in significantly in digital banking and
mobile solutions, enhancing customer experience.
5. The unique analysis of the market- KCB analyses the market and its competitors to get
detailed information about the internal and external factors affecting the relevant industry
to help to manage the business environment.

Weaknesses:

1. Dependence on the Kenyan Market: KCB's heavy reliance on the local market makes it
vulnerable to economic fluctuations.
2. Legacy Systems: Some legacy banking systems may hinder efficiency and innovation.
3. High Operating Costs: The cost of maintaining a large branch network both internally
and externally markets affects the profitability of KCB.
 4. Regulatory Challenges: Subject to strict regulatory environments that can limit
operational flexibility

Opportunities:

1. Digital Transformation: KCB has adopted advanced technological solutions Increasing

solutions and mobile banking present growth opportunities.
2. Regional Expansion: KCB has the potential opportunity to expand into other African
markets other than East African countries to diversify its geographical risk.
3. Sustainability Initiatives: KCBshould focus on a growing focus on sustainable finance
and green banking could attract new customers both internally and externally
4. Partnerships and Collaborations: KCB can collaborate with fintech firms to enhance
service offerings and market reach.

Threats:

1. Regulatory Changes: Changes in regulations may impose additional compliance costs

and this will affect profitability.
2. Competition: The banking sector is highly competitive, with both traditional banks and
new fintech entrants
3. Economic Instability: Economic downturns can lead to increased loan defaults and
reduced customer spending.
4. Cybersecurity Risks: Increased reliance on digital platforms can lead to exposure to
cyber threats.

Impact Assessment

● Strengths will help KCB leverage its market position, but weaknesses could hinder its
ability to adapt quickly to market changes.
● Opportunities present avenues for growth, particularly in digital banking, but threats
from competition and economic instability could offset these gains.
● The bank's investment in technology can enhance operational efficiency and customer
satisfaction, but it also increases exposure to cybersecurity risks.
Strategic Response Recommendations

1. Enhance Digital Technology: KCB should invest further in mobile and online banking
platforms and collaborate with fintech startups to innovate services and improve
customer experience.
2. Expand Regionally: KCB should pursue strategic acquisitions or partnerships in
neighboring countries to diversify operations and reduce reliance on the Kenyan market.
3. Conduct market research: KCB should conduct market research to identify the most
promising regions and tailor services accordingly.
4. Cost Optimization: KCB should streamline operations to reduce high operating costs, by
closing underperforming branches and investing in digital channels and also implement
more efficient banking technologies and processes.
5. Strengthen Cybersecurity: KCB should invest in robust cybersecurity measures and
regular training for staff to mitigate risks associated with digital banking and also develop
a crisis management plan for potential cyber threats.
6. Focus on Sustainable Finance: KCB should create green financial products to attract
environmentally conscious customers, and also engage in community development
initiatives that align with sustainable banking practices.
7. Enhance Customer Engagement: KCB should utilize data analytics to understand
customer needs and preferences, and also implement loyalty programs and personalized
services to increase customer retention.

How analysis contributes to strategic planning

1. Informed Decision-making helps an organization to identify trends, opportunities, and

threats, enabling leaders to make informed decisions based on evidence rather than intuition.

2 Risk Assessment: Analyzing potential risks allows organizations to anticipate challenges and
develop mitigation measures.

2. Understanding the Market- Analyzing market conditions, customer preferences, and

competitor strategies helps organizations understand their position and identify areas for growth.
3. Resource Allocation-The analysis aids in determining which initiatives or projects should be
given priority in the allocation of resources based on their potential impact and alignment with
strategic goals.

4. Strengths and Weaknesses Evaluation- A structured analysis of strengths, weaknesses,

opportunities, and threats informs strategic decisions by highlighting areas for improvement and
potential advantages and identifying organizational capabilities and limitations to help align
strategies.

5. Planning-Exploring different future scenarios enables organizations to prepare for various

outcomes and adapt strategies accordingly. Understanding long-term trends in the industry helps
in setting realistic and achievable strategic objectives.

6. Stakeholder Engagement- Analyzing stakeholder feedback ensures that strategic plans align
with the interests and concerns of key stakeholders

7. Performance Monitoring-Regular performance analysis against strategic goals enables

organizations to adjust strategies and improve outcomes over time.

Conclusion

In summary, analysis is fundamental to strategic planning as it provides a framework for

understanding the internal and external environment, guiding resource allocation, and ensuring
that decisions are aligned with long-term objectives. Effective analysis leads to more resilient
and adaptable strategic plans that can respond to changing conditions in the market.

Reference

https://pdf.marketpublishers.com/bac_swot/kenya_commercial_bank_ltd_swot_analysis_bac.pdf

https://www.marketresearch.com/MarketLine-v3883/KCB-Group-Plc-Strategy-SWOT-
34893198/
PESTEL
The environment in which an entity operates can be classified into Macro-level and Micro-level
environment. Macro-level environment consists of factors outside the organizations’ boundaries
over which the entity has minimum or no control at all. Micro-level consists factors within the
internal environment of the entity.
In this section PESTEL, a model invented by Francis Aguilar over 50 years ago (Lezgovko
2015), is employed to explore the macro-level factors affecting Kenya Commercial Bank (KCB).
PESTEL is a framework used by marketers to monitor and do an analysis of the external
environment factors (macro-environmental) that affect an organization. It is an acronym for
political, economic, sociocultural, technological, environmental and legal factors that affect an
organisation.

Political factors
The political environment can significantly affect the operations as well as the existence and well
being of an organization. Frequent changes in political regimes and improper implementation of
governmental policies and procedures greatly affect business operations and existence. Political
influence has an overall impact on the economy, damaging the entire industry.
Political factors affecting KCB include change of government policies, change of foreign trade
policies; internal political issues and trends; tax policy; regulation and de-regulation trends.

Economic Factors
Economic factors include current and projected economic growth; inflation and interest rates; job
growth and unemployment; labour costs; impact of globalization; and disposable income of
consumers and businesses.
Economic factors have affected KCB. Due to hard economic times faced in Kenya, consumers
have been reluctant to obtain loans from banks. This has also been brought about by the high
costs of borrowing. KCB has not been able to attract a big number of loan borrowers.

Social Factors
Social factors include demographics (age, gender, race, family size); consumer attitudes,
opinions, and buying patterns; population growth rate and employment patterns; socio-cultural
changes; ethnic and religious trends and the citizenry’s living standards. Kenya boasts of a large
young population most of whom lack employment. This factor has affected their saving and
investing capabilities. As a commercial bank, KCB has been affected by this phenomena hence a
reduction in savings.

The following is PESTEL analysis of KCB.

Macro – Effect and impact Strategic response
environmental
factor
Political Government - Medium Maintain a good relationship
instability with governments in power
Current / high - High Provide financial knowledge
taxation policy to the people on the security
of their investments and
savings in the institution
(KCB)
Economic National debt levels - High Aspire to provide low
interest loans
Unstable shilling - High
against the dollar
High Interest rates - High

Inflation - Medium

Unemployment - Medium

Sociological Demographs (Large - Medium Provide products that are

young population) appealing to the young
people
 Consumer attitudes - Low
and opinions

High unemployment - High

rates

PESTLE IMPACT MAP

NEGATIVE POSITIVE
 
High medium low Low medium High
Current / high Government P (POLITICAL)
taxation policy instability
National debt levels Inflation E (ECONOMIC)
Unstable shilling Unemployment
against the dollar
High Interest rates
High Demographs Consumer S
unemployment rates (Large young attitudes (SOCIOLOGICAL)

population) and
opinions

Role of analysis in strategic planning

The PESTEL analysis would help KCB to manage threats and discover opportunities hence plot
relevant strategies.

Conclusion
Macro-level environment factors play a significant role on the continuity and prosperity of KCB
and as such cannot be ignored nor taken lightly. Considering the fact that KCB cannot eliminate
every negative impact of the macro-environmental factors it has to take endeavour to mitigate the
magnitude of the impact.

Technological Factors for KCB Bank.

• Innovation: KCB Bank has leveraged on technology and innovation to improve service
delivery, customer experience and increase of revenue.

• Improved Decision making through data analytics: KCB Bank has adopted
technology to make data driven decision making through collecting customer feedback
and insights through online Research using the business intelligence tools.

• Internet Banking: KCB bank allows customers to transact over the internet. This gives
customers the ability to carry out self services on the website-cash transfers.

• Digital Channels/ Mobile Banking: KCB provides integration of mobile technology

with banking. The introduction mobile banks applications enables customers to bank over
mobile applications. 87% of KCB bank’s total transactions are currently being done on
Digital Channels.

• Interconnectivity with other financial institutions: Through technology, customers can

transact across different financial platforms such as mobile wallets.

• Automation of services: KCB Bank has automated withdrawals through ATMs. The use
of Interactive Voice Recorder helps customers resolve their issues online without having
to visit the branches.

• Robotic Process Automation: KCB bank makes use of technology to automate

mundane repetitive tasks like queue management and cheque truncation. They have
currently automated 62 processes.

• E-Commerce: KCB bank has leveraged on Digital Lending through the issuance of
mobile loans to its customers. Repayments are also made digitally.

• Artificial Intelligence: KCB bank uses artificial intelligence to study customer behavior
and give recommendations on their products and services.

Environmental Factors
 • 50% LED lighting adoption on all KCB branches to save on electricity energy.
• Solar adoption: KCB has rolled out the use of solar in 2 branches and targeting 19 more
branches by 2025.
• Disposal of assets: KCB Bank disposes its assets according to the laid out environmental
policies
• CSR activities: Linda Miti initiative, KCB Bank participated in planting 314,00 trees in
partnership with schools
Legal Factors
 KCB bank is Compliant with the regulatory core and total capital requirements
regulations.
 Training of employees and sensitization on ethics. They are trained on Identification,
prevention and frustration of fraud cases.
 Complying with Statutory and regulatory requirements on Tax remission.
 KCB Bank is compliant on Customer Data Privacy, data protection and have ensured
registration of all their intellectual property.
 KCB Bank adheres to the Central Bank regulations.
 KCB bank uses of Licensed software for their technology operations.
 Conflict of interest declaration is strictly made by all employees and stakeholders. They
give guidance on any situation that poses a risk to the business to be declared.
 KCB bank adheres to anti -bribery, Corruption and anti money laundering control in their
business operations.
Impact Assessment
 Customer base growth and market share leadership: With great service and
experience with the services, KCB bank has grown its customer base to over 38 million
customers as of 2023.
 Acquisition and retention strategy: KCB has offered so much banking convenience to
its customers and this has resulted to increased loyalty from the customers.
 Cost reduction: When voluminous and labour intensive tasks are automated, it reduces
man hours paid for the tasks to be done.
 Improved products and services: The use of Business intelligence tools, this helps to
produce custom-made products for its customers.
  Market leadership: With a customer base of over 38 million customers, KCB banks
leads with a market share of over 14% as at 2024.
 Good reputation and desirable public Image: With a good financial performance,
compliance and good customer service experience, the bank has a good public image
internally and externally.
 High Employee Retention levels: With a good public image, KCB bank employee
retention levels are very high.
 Employee career Growth opportunities-Innovation has created career growth
opportunities in KCB bank.759 employees were promoted in 2023.
 A good relationship with the government and regulators-The tax remission
compliance has put KCB bank in a good relationship with the government and its
stakeholders.

Plausible Strategic Response

 Technology strategic planning: With the technology benefits within KCB bank, there is
a need to eliminate existing legacy systems to easily meet mission and vision within the
coming years.
 Business processes Re-engineering: This entails updating business procedures and
processes that are outdated and simplifying complex processes.
 Employee Motivation: A firm will endeavor to encourage and reward employees who
come up with innovative ideas which are highly impactful to the business with tangible
outcomes.
 Better environmental responsibility: PESTEL analysis points out the areas a firm may
not be highly performing in regard to corporate Social responsibility and recommend
ways of improvement.
The role of analysis in Strategic Planning
 Data driven Decision Making: PESTEL analysis of a firm enables better planning based
on found out facts and this helps a firm better leverage on customer feedback and
insights.
 Corporate Strategic planning: It enables synergy of all departmental strategies and
activities to align with the overall corporate strategy.
  Competition Preparedness: PESTEL analysis helps firms to come up with ways of
handling competition within the industry. A business that conducts PESTEL has a
competitive edge over its competitors since they can aggressively to respond to the ever-
changing customer needs.
 Balanced Resource allocation: Business analysis ensures that resources are focused on
the impactful initiatives.
 Striking a balance between customers, shareholders and the business: This is a very
delicate balance and with PESTEL analysis, it is easier to lay out business priorities using
the right approach.
Five Forces Framework Analysis for KCB

1. Threat of New Entrants:

 Assessment: The threat level is moderate to high. Although traditional barriers like
significant capital investment and regulatory requirements exist, the rise of fintech
companies has lowered these obstacles. Fintechs typically operate with lower overhead
costs and can swiftly adapt to market changes, making it easier for them to enter the
banking sector. This shift heightens competition and pressures established banks like
KCB to innovate and enhance their offerings.
 Strategic Response: KCB should actively monitor fintech developments and consider
investing in technology to improve operational efficiency and customer service. This
could involve creating user-friendly digital banking solutions that effectively compete
with new entrants.

2. Bargaining Power of Suppliers:

 Assessment: The bargaining power of suppliers is generally low, especially for

traditional suppliers like IT service providers. However, as KCB increasingly depends on
technology vendors for software and systems, this reliance is growing, which could alter
the power dynamics in the future. While suppliers currently wield limited influence, KCB
should remain vigilant regarding vendor relationships and associated costs.
  Strategic Response: To mitigate supplier risk, KCB could diversify its technology
partners and invest in internal capabilities. This strategy would reduce dependence on any
single supplier and allow for greater control over technology implementations.

3. Bargaining Power of Customers:

 Assessment: Customers have high bargaining power due to the abundance of banking
options available. The presence of alternative financial services, particularly from fintech
companies, empowers customers to demand superior service quality, competitive pricing,
and personalized offerings. This situation necessitates that KCB continuously enhance its
value proposition to retain clients.
 Strategic Response: KCB should prioritize customer experience by utilizing data
analytics to offer personalized banking solutions and tailored services. Additionally,
implementing loyalty programs and actively seeking customer feedback can further
strengthen client relationships and foster loyalty.

4. Threat of Substitutes:

 Assessment: The threat of substitutes is high, primarily due to the rise of fintech
solutions and mobile money platforms, such as M-Pesa. These alternatives offer
consumers a variety of non-traditional banking options, often at lower fees and with
greater convenience. As consumers increasingly gravitate towards these substitutes, KCB
faces significant pressure to adapt.
 Strategic Response: KCB should consider partnerships with fintech firms to integrate
innovative features into its services, such as instant payments and mobile banking
capabilities. By adopting these features, KCB can remain competitive and offer
comprehensive banking solutions that align with evolving customer needs.

5. Industry Rivalry:
  Assessment: The level of rivalry within the banking sector is intense. Banks and fintechs
are engaged in fierce competition marked by pricing wars, innovative marketing
strategies, and the introduction of new products. This rivalry can negatively impact
profitability as institutions strive for market share.
 Strategic Response: KCB should focus on differentiation through unique product
offerings and exceptional customer service. Additionally, strategic marketing campaigns
that showcase KCB's strengths and innovative solutions can help the bank stand out in a
saturated marketplace.

Advice on Strategic Response:

 Focus on Customer Experience: Enhancing personalized banking services is essential.

KCB can implement targeted marketing campaigns and loyalty programs that reward
long-term customers. Investing in customer service training and employing customer
feedback mechanisms will further improve overall service quality.
 Collaborate with Fintechs: Forming partnerships with fintech companies can drive
service innovation. By combining KCB's banking expertise with fintech agility, the bank
can develop new products and services that attract tech-savvy customers and meet their
expectations for convenience and efficiency.

Role of Analysis in Strategic Planning:

The Five Forces framework is a crucial tool for KCB in evaluating competitive pressures within
the banking industry. By analyzing these forces, KCB can identify strategic positioning
opportunities and potential threats, guiding its decision-making processes. This analysis aids the
bank in recognizing areas for differentiation and innovation, ultimately supporting long-term
sustainability and growth in a rapidly changing market. By proactively addressing these
competitive dynamics, KCB can enhance its market position and better serve its customers.
Background on the GE-McKinsey Matrix

The GE-McKinsey Matrix was developed in the 1970s by McKinsey & Company in
collaboration with General Electric (GE) to address the limitations of the Boston Consulting
Group (BCG) Matrix. GE, at the time, was a highly diversified conglomerate with numerous
strategic business units (SBUs), and the leadership sought a more comprehensive framework to
evaluate and manage the performance of these units. The result was a matrix that provided a
more detailed analysis of business unit strength and market attractiveness, helping the company
make more informed decisions about resource allocation and strategic planning.

Origins and Purpose

GE, under the leadership of CEO Reginald Jones, wanted to go beyond the BCG Matrix, which
focused solely on market growth and market share, to create a tool that considered more
variables. They partnered with McKinsey, who designed a more flexible, multidimensional
framework. The GE-McKinsey Matrix serves to help large, multi-business corporations manage
their portfolios by evaluating each business unit’s potential for growth and contribution to the
company’s overall strategy. This tool became particularly important for GE, which managed a
highly diverse set of businesses spanning multiple industries, from aviation and power to
healthcare and finance.

Structure of the GE-McKinsey Matrix

The matrix is composed of two dimensions:

1. Industry Attractiveness (vertical axis)

2. Business Unit Strength (horizontal axis)

Each axis is divided into three levels: High, Medium, and Low, resulting in a nine-cell matrix
that provides a more nuanced and flexible evaluation than the four-cell BCG Matrix.

1. Industry Attractiveness

This dimension examines the external factors that impact the overall appeal of the industry or
market in which the business operates. Common criteria for determining industry attractiveness
include:
  Market Size and Growth Rate: A growing market is more attractive than a stagnant
one.
 Profit Margins: Industries with higher margins provide more room for profitability.
 Competitive Intensity: Less competitive industries may provide easier paths to growth.
 Technological Innovation: High innovation can drive industry transformation and
increase attractiveness.
 Regulatory Environment: Industries with favorable regulations or government
incentives are more attractive.

2. Business Unit Strength

This dimension evaluates the internal factors of the specific business unit, assessing its relative
strength in the market. Common criteria include:
 Market Share: A dominant market share indicates stronger business positioning.
 Brand Strength: Strong brands can command customer loyalty and pricing power.
 Product Quality: Superior products enhance competitive positioning.
 Distribution Network: A well-established distribution network provides a competitive
advantage.
 Cost Structure: Low-cost structures enable businesses to compete effectively on price.

Strategic Implications Based on Matrix Positioning

Once business units are plotted on the nine-cell matrix, the next step is to decide on the strategy
for each unit based on its position:

 Invest/Grow (Top Right): Units with high industry attractiveness and strong competitive
positioning. These units are typically prioritized for additional investment to fuel growth,
as they offer the best long-term returns. The objective here is to maximize market share
and strengthen competitive advantages.
 Hold/Selectively Invest (Middle): Units in moderately attractive industries or with
moderate strength. These units may warrant selective investment to improve their
position or hold their ground until market conditions change. For example, businesses in
 mature industries or those facing competitive pressures may still be profitable, but with
limited growth potential.
 Harvest/Divest (Bottom Left): Units with low attractiveness and weak strength. These
are often candidates for divestiture or downsizing. If the business is in decline and offers
little strategic value, management should consider withdrawing investment to focus
resources on more promising areas.
GE –MCKINSEY ANALYSIS OF KCB
KCB BANK PERFORMANCE IN 2024

KCB Bank Group reported robust financial results for the first half of 2024. The bank's net profit
surged by 87%, reaching KES 29.9 billion, driven by strong growth in both interest and non-
interest income. Key contributors included a 34.8% rise in net interest income to KES 61.33
billion, supported by higher interest rates and an expanding loan book. Additionally, non-interest
income, which includes fees and foreign exchange trading, jumped 52.3%, boosting total
operating income to KES 94.6 billion.

Despite a rise in operating expenses by 11.7%—mainly due to higher loan loss provisions and
staff costs—the bank improved its efficiency, reducing its cost-to-income ratio from 55.3% to
46.8%. Total assets grew by 6% to KES 1.98 trillion, while customer deposits increased to KES
1.49 trillion. However, non-performing loans (NPLs) rose to KES 212 billion, pushing the NPL
ratio up to 18.5%.

The table below shows a breakdown on KCB Group performance in 2024

AREA GROWTH RATE DRIVERS

Interest Income Net interest income rose by Increased lending volumes and higher
34.8% to KES 61.33 billion interest rates across loan portfolio,
expanding to KES 1.032 trillion from
KES 964.8 billion. Growth from
corporate, retail, and mortgage lending
Non-Interest Income Non-interest income surged Fueled by increased revenues from
by 52.3% to KES 33.2 fees, commissions, and foreign
billion. exchange trading; growth in digital
banking platforms and transaction
volumes.
Operating Income Total operating income Combined result of interest and non-
increased by 29.5% to KES interest income
94.6 billion.
Operating Expenses Operating expenses went up Attributed to higher staff costs (KES
by 11.7% to KES 56.51 19.28 billion) and increased provisions
billion for loan losses.
Cost-to-income ratio improved to
46.8% from 55.3%.
Subsidiary Performance Subsidiaries contributed National Bank of Kenya saw a
37.8% of pretax profits; turnaround with a net profit of KES
34.4% of total group assets. 828.74 million after recovering from a
loss of KES 3.8 billion.
Non-Performing Loans (NPLS) Gross NPLs rose to KES Rise attributed to downgrades in Kenya
212 billion; NPL ratio and foreign currency translation losses
increased to 18.5% from
17.4%.
Dividends and Shareholder KCB reinstated dividend KCB reinstated dividend payments
Returns payments with an interim with an interim dividend of KES 1.50
dividend of KES 1.50 per per share (KES 4.8 billion total).
share (KES 4.8 billion total).

KCB BANK GROUP STRATEGIC BUSINESS UNITS

KCB Bank organizes its operations into various Strategic Business Units (SBUs) that drive its
performance. Here's an overview of the 2024 half-year performance based on each SBU:

1. Retail Banking

 Performance: Retail banking contributed significantly to KCB's profitability. The SBU

saw growth in loans and deposits driven by increased customer acquisition, particularly
 in digital banking products. Retail banking benefited from strong demand for personal
loans, mortgages, and transaction accounts.
 Key Metrics: Retail banking’s contribution to non-interest income rose, especially from
fees and commissions due to the growing number of transactions on KCB's mobile and
online platforms

2. Corporate Banking

 Performance: Corporate banking also registered robust growth, mainly from large-scale
lending and working capital loans to businesses. KCB reported increased demand for
trade finance, treasury services, and foreign exchange trading from corporate clients.
 Key Drivers: A significant portion of interest income came from corporate loans,
including those to manufacturing, real estate, and agriculture sectors. There was also a
rise in non-funded income from transaction-based services offered to corporate clients

3. Treasury and Investment Banking

 Performance: The treasury business performed strongly, with foreign exchange trading
being a major contributor to non-interest income. KCB leveraged its presence in multiple
markets to benefit from foreign exchange volatility, particularly in the Kenyan shilling.
 Key Metrics: Treasury income grew due to higher transaction volumes and gains from
interest rate fluctuations

4. Digital Banking

 Performance: Digital banking saw impressive growth, with KCB's mobile banking app
and MobiGrow platform driving a surge in transaction volumes. KCB also extended its
loan offerings through mobile platforms, which led to increased short-term lending.
 Growth: Digital banking contributed significantly to both interest and non-interest
income through transaction fees and mobile loans

5. Subsidiaries and Regional Operations

  Performance: KCB’s subsidiaries outside Kenya, including those in Uganda, Rwanda,
Tanzania, South Sudan, and Burundi, made significant contributions. They accounted for
37.8% of the Group’s pretax profits and 34.4% of total assets.
 Notable Subsidiary: National Bank of Kenya, which had previously underperformed,
turned profitable during this period, recording a profit of KES 828.74 million(

6. SME Banking

 Performance: KCB's Small and Medium Enterprise (SME) segment saw a strong
demand for working capital loans and overdrafts. The bank continued to roll out
specialized products catering to the financing needs of SMEs, helping boost loan book
growth.
 Key Metrics: The SME sector benefited from reduced lending rates, which helped in
attracting more clients from this segment

The table below shows performance across SBUs

GROWTH RATE CONTRIBUTION

SBU KEY DRIVERS
(2024 VS 2023) TO BUSINESS
Major contributor Growth in customer deposits,
to both interest and increased personal and
Retail Banking +25.4% (Deposits)
non-interest mortgage loans, expansion of
income digital channels
Significant Large-scale corporate lending,
Corporate Banking +12.2% (Loans) contributor to demand for working capital,
interest income treasury services
Fast-growing
N/A (Increased Increased digital transaction
Digital Banking contributor to non-
transactions) volumes, mobile loan offerings
interest income
Growing
N/A (Increased loan contributor, Customized solutions for
SME Banking
uptake) particularly in SMEs, targeted loan products
lending
 Significant
Growth in regional markets,
Subsidiaries/Regional +37.8% (Pretax profit contributor to total
recovery of National Bank of
Operations contribution) assets and
Kenya
profitability

ANALYSIS OF KCB USING GE-MCKINSEY MATRXIX

Market Attractiveness Criteria for KCB

 Market Size and Growth: Financial services in Kenya and the wider East African
region are experiencing steady growth, driven by increasing digital penetration and
financial inclusion efforts.
 Profitability: Despite challenges like rising non-performing loans (NPLs), KCB operates
in a profitable sector with rising interest rates and growing demand for credit.
 Competitive Intensity: KCB faces strong competition from other major banks like
Equity Bank and Co-operative Bank, but its wide product range and digital innovation
give it a competitive edge.

Business Unit Strength for KCB

 Market Share: KCB is the largest bank by assets in East Africa, giving it a solid
competitive position.
 Financial Performance: KCB reported a substantial growth in net profits (+87% in H1
2024), demonstrating strong financial health and operational efficiency
Analysis and Recommendations across SBUs:

1. Retail Banking: With high market attractiveness and strong performance, KCB should
continue to invest in its retail banking unit. Digital transformation, particularly mobile
and internet banking, will help retain market leadership and tap into underserved
segments
2. Corporate Banking: This SBU enjoys a strong competitive position and high market
attractiveness due to large-scale lending and demand for business services. Expanding
 into new corporate sectors like infrastructure and public-private partnerships will boost
growth
3. Treasury: Although profitable, treasury services are exposed to market fluctuations,
particularly in foreign exchange. Selective investments in regional expansion and
improving risk management tools can enhance profitability

The table below summarizes analysis across the SBUs

Business
Market Strategic
SBU Unit Recommendations
Attractiveness Position
Strength
Continue expanding digital
channels, introduce more
Retail Banking High High Invest/Grow
personalized products, focus
on customer retention
Strengthen syndication of
large loans, focus on
Corporate Banking High High Invest/Grow
infrastructure financing and
working capital loans
Focus on expanding foreign
Treasury and Asset Selectively exchange and interest rate
Medium High
Management Invest hedging services in regional
markets
Invest further in mobile
platforms and fintech
Digital Banking High High Invest/Grow partnerships, integrate digital
services across East African
subsidiaries
Increase SME product
Selectively awareness, leverage digital
SME Banking Medium Medium
Invest banking for SMEs, improve
credit accessibility
Expand footprint in fast-
growing East African
Subsidiaries/Regional
High Medium Invest markets, capitalize on
Operations
National Bank of Kenya’s
recovery
z

Key
Strategic Business Units (SBUs):
1. Retail Banking
2. Corporate Banking
3. Treasury and Asset Management
4. Digital Banking
5. SME Banking
6. Subsidiaries/Regional Operations
Conclusion

KCB is well-positioned to maintain its leadership in East Africa’s banking sector. The bank
should focus on investing in its high-potential SBUs like retail,
corporate, and digital banking, while selectively growing other units like treasury and SME
banking. Expanding regional operations and improving asset quality
will be critical for sustaining long-term growth.

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