Rwanda and the Democratic Republic of Congo (DRC) were the most profitable regional subsidiaries for Kenyan lenders KCB Group and Equity Group respectively in 2021. Revealing the benefits of acquisitions they made in those countries.
KCB acquired Banque Populaire du Rwanda (BPR) in June last year from London-listed financial services firm Atlas Mara Limited. Eyeing a larger footprint in retail banking in the country.
Equity on its part bought a 66.53 percent stake in Banque Commerciale Du Congo (BCDC) in 2020. Having earlier taken over ProCredit in the same market and which it subsequently renamed Equity Bank Congo.
It has since merged the two banks. The lender said that in 2021, the DRC operation contributed Ksh4 billion ($35 million) in net profit to the group. Which was equivalent to 10 percent of its total net income of Sh40 billion.
This was the highest contribution by a regional subsidiary, ahead of Equity Uganda’s Ksh2.6 billion ($23 million).
KCB’s Rwanda operation also benefitted from the addition of the new acquisition, raising its profit before tax by 71 percent. Or Ksh450 million ($3.9 million) to Ksh1.08 billion ($9.4 million) last year.
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DRC and Rwanda subsidiaries
Its Tanzania business followed at Ksh1.07 billion ($9.3 million). While KCB South Sudan, which was the most profitable regional subsidiary in 2020.
With a gross profit of Ksh672 million ($5.9 million), fell to third last year after earning of Ksh995 million ($8.7 million).
The DRC and Rwanda subsidiaries for the two banks came with significant and established balance sheets, allowing them to make an immediate return.
Operations from scratch
Kenyan lenders have in recent years sought regional diversification as a means of growing their balance sheets away from Kenya’s competitive local market.
Hoping to take advantage of the regional integration that has opened up new opportunities in trade and investment financing.
In previous years, the banks were starting operations from scratch when entering regional markets, which has seen some of them take time to realize a return and build scale.
Branches and agents
In previous years, the banks were starting operations from scratch when entering regional markets, which has seen some of them take time to realise a return and build scale.
KCB now boasts of 150 branches and 944 agents in Rwanda, second only its Kenya unit which has 296 branches and 14,512 agents. None of the other regional subsidiaries have more than 15 branches.
In the DRC, Equity now has 70 branches, well ahead of Uganda’s 43, and just over a third of Kenya’s 190.