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Arabian Business
3 days ago
- Business
- Arabian Business
Kenya's Equity Group to open representative office in the UAE
Equity Group Holdings, Kenya's largest lender, plans to expand its footprint and capitalise on the growing opportunities in the Middle East, following shareholders' approval at its 21st Annual General Meeting (AGM) to establish a Representative Office in the United Arab Emirates (UAE). Subject to regulatory approvals, the new office aims to facilitate business, trade and investment opportunities between East and Central Africa, the UAE, and the wider Middle East, India, Central and South Asia regions. Equity Group Holding is the largest financial services conglomerate in East and Central Africa. As of December 2024, it had assets exceeding US$13.9 billion and served over 21.6 million customers across seven African countries, with deposits exceeding US$10.8 billion. Prof Isaac Macharia, Chairman of Equity Group Holdings, said: 'The establishment of a Representative Office in the UAE marks a strategic step in deepening regional and global connectivity.' Equity will join African rivals including Absa Group, Standard Bank Group and United Bank for Africa, which are either expanding into or already operating in the Middle East. Dr James Mwangi, Equity Group Managing Director and CEO, added: 'Equity Group continues on a strong growth trajectory, driven by our commitment to innovation, regional expansion, and sustainable practices. The establishment of a Representative Office in the UAE marks an exciting step in our journey to connect Africa with global markets, creating new opportunities for trade and investment.' In an interview with Bloomberg TV, Mwangi added: 'The Middle East has deep capital sources, very strong logistics for trade and it is a strong center for investment. Linkage with the middle-income segment is growing in India and China. That will provide a very strong market wave for African goods and services.'
Zawya
01-07-2025
- Business
- Zawya
Regional subsidiaries boost profits for Kenyan banks
Virtually every aspect of lend- ing for the big banks, says Ronny Chokaa, a senior ana- lyst at Nairobi-based Capital A Investment Bank, 'was almost flat in Kenya [over the last year and more], but in the subsidiaries, it went up. Most of the external economies were growing faster than Kenya. So, banks benefited from actual lending outside Kenya.' Nearly all Kenya's banks wit- nessed a surge in external profits in 2024, with Equity Group generating the highest at Ksh24.4bn ($188.9m), accounting for half of the total Ksh48.8bn ($377.7m) net profit. Its closest competitor and the largest bank in Kenya, KCB Group, reported that 30.3% or $144.7m of its total net profit of $478.3m came from foreign subsidiaries, while NCBA Group achieved $24.8m, representing a 13% share of the total. The profit share from I&M Group's subsidiaries also rose to 29% or 46.4m in 2024, despite its Mauritius sub- sidiary, Bank One Limited (acquired in 2008), plunging into losses. I&M had a total net profit of $128.5m during the period. The increase in profit contribution, cou- pled with the potential for more dividends from foreign subsidiaries in the near fu- ture, highlights the gradual maturity of these external investments after years of capital injection by parent banks. Lawrence Kimathi, KCB Group CFO, says robust external subsidiaries are important 'to diversify and de-risk Kenyan con- centration' while Equity Group's CEO, James Mwangi, views the Kenyan unit as 'a sleeping giant that can push back. 'The strategy of regional expansion is truly effective. This diversification aids us in managing economic shocks. It will be intriguing to see Kenya regain its posi- tion as contributing more than 50% of the profit,' Mwangi notes. The decline in the contributions of Ken- yan domestic units coincides with slower GDP growth, projected at 4.7% in 2024, down from 5.6% in 2023. This growth lags behind peers like Rwanda, Tanzania and Ethiopia. Tight monetary conditions, which per- sisted until mid-2024, when the Central Bank of Kenya (CBK) initiated minimal cuts in benchmark interest rates, con strained private sector lending, with banks prioritising government debt over riskier retail and individual loans. Commercial bank lending to the private sector contracted by 1.4% in December 2024 compared to a year previously, due to several factors including reduced demand for loans amid defaults. Banks lagged passing on the benefits of the benchmark rate cuts to Kenyan bor-rowers, citing costly funds tied to locked deposits. The reduction in interest rates is anticipated to encourage more borrowing for consumption and investment, thus stimulating economic activities in 2025. Kenya's economy is forecast to rebound this year at 5.3%, attributed to improve- ments in the agriculture and service sec- tors. However, this growth will still lag behind countries such as Rwanda, DRC and Tanzania, where growth rates are expected to exceed 6%. 'Interest rates are inching down, and inflation remains under control. We are remaining at the table with other Kenyan bankers to see how we can quickly transmit changes in in- terest rates,' says Paul Russo, KCB Group's CEO. The strengthening of the shilling against the dollar, which led to cur- rency translation losses, also partly reduced the value of assets and earn- ings, especially in Kenya, South Sudan and DRC, where lenders have signifi- cant holdings in dollars. The Kenya shilling appreciated from a high of 160 per dollar in February 2024 to 129 last December. DRC is the key Big lenders KCB Group, Equity Group, DTB Group, NCBA, and I&M Group have op- erations across Tanzania, Uganda, South Sudan, the Democratic Republic of Congo (DRC), Rwanda, Mauritius and Burundi. Outside Kenya, DRC tops the profit chart for Kenyan banks, buoyed by a large un- banked population and the arrival of global firms seeking investments in the mineral sector. The central African nation is esti- mated to have $24trn-worth of untapped minerals such as cobalt, gold and copper, needed in the fast-growing e-mobility sector. Both Equity Banque Commerciale du Congo (EBCDC) and KCB's Trust Merchant Bank (TMB) achieved double-digit profit growth in DRC last year, reaching $120.7m and $80.5m respectively. Equity enjoys a bigger market share than KCB in DRC, having entered the popu- lous country earlier through a series of acquisitions that began in 2015, to spur market penetration. Today, EBCDC, with 79 branches, is the second-largest in DRC af- ter Rawbank, boasting an asset base worth $5.1bn, more than double KCB's $2.1bn. As in DRC, Equity has outperformed KCB, I&M Bank, and NCBA in Rwanda. The lender commands an asset base of $962.1m and generated a net profit of $41.8m in 2024 in Rwanda, while KCB reported $23.2m profit from its $712.1m assets. NCBA, which holds 3.5% of Rwanda's banking sector, reported a gross loss of $1m last year, with the management not- ing in its outlook that 'Rwanda is clouded by external vulnerabilities due to escalat- ing conflict with the DRC'. 2024 marks the second consecutive year that NCBA's external subsidiaries collec- tively realised a profit growth, turning from a combined gross loss of $12.8m in 2021 to $24.8m profit last year. NCBA Group, which heavily relies on its do- mestic Kenyan unit, has three exter-nal banking subsidiaries in Rwanda, Tanzania and Uganda, along with digital operations in Côte d'Ivoire. In Uganda and Tanzania, the Ken- yan lenders are struggling to grow and challenge other institutions like South Africa's Standard Group (Stan- bic), which maintains a relatively firm grip of those two markets. NMB Bank and Cooperative Rural Development Bank (CRDB) are also dominant in Tanzania, collectively commanding about 43% of the mar- ket. While the performance of Kenyan banks improved in those two markets in 2024, the profit contribution from the Uganda and Tanzania units was low last year, ranging between 0.6% and 5% for Equity, NCBA, and I&M Group. 'We are exploring ways to achieve a breakthrough in Tanzania because it is a strategic market. Starting in 2025, the group will invest heavily and put a lot of focus on Tanzania,' says Equity CEO James Mwangi. (See page 87.) However, there are still stark risks in the DRC and South Sudan, as military clashes intensify amid faltering peace talks. Kenyan banks operate branch- es across various locations in the DRC, primarily in Kinshasa, Lubumbashi and Goma. KCB has over 110 branches in different parts of the DRC. Its operations in eastern DRC, where Rwanda-backed M23 rebels have gained control, have already reported a 10% impact on their revenue within the first two months of 2025. This impact translates to approximately $23.2m in revenue loss that could worsen if the conflict spreads to other parts, espe- cially Lubumbashi, DRC's commercial and industrial hub located in the southeast. 'Luckily, eastern DRC is not that big and not very economically advanced or densely populated. If the situation continues and escalates, it could worsen. For now, we can absorb the 10% impact we've experienced,' says Russo of KCB. Foreign interest in DRC mines has partly exacerbated ongoing geopolitical tensions, with the US reportedly a frontrunner in sealing a mineral pact with Kinshasa in exchange for military support to neutralise the M23 rebels. Similarly, the war in South Sudan, the world's youngest nation, has led to deaths, disrupted businesses, and threatened oil exports, the country's primary source of revenue. Equity, KCB, and Co-operative Bank, which together control nearly 40% of South Sudan's banking sector, had mixed performances in that market in 2024. In South Sudan, KCB grew faster than any other Kenyan bank, reporting a 53% year-on-year rise in revenue to $31.8m. Equity and Co-operative Bank experienced profit drops of 40% and 98%, respectively, in Juba due to decreased cus- tomer deposits and rising loans. The South Sudan unit is the sole external subsidiary for Co-operative Bank, which it co-owns with the national government. Mixed dividend pay-outs The overall profit increase by Kenyan banking heavyweights resulted in record dividend pay-outs. The top nine banks declared a combined dividend of Ksh85.3bn ($660.2m). However, the dividend pay- ments from players like KCB, Equity, NCBA, and Co-operative Bank, compared to for- eign banks in Kenya, fell short of market expectations, given their impressive fi- nancial performance. Some analysts believe this is a conserv- ative approach as a result of the lenders aiming to build more capital for growth in external markets, particularly in Ethiopia, which some are targeting once banking regulations are finalised. KCB, for instance, paid $74.3m in dividends, reflecting just 15.5% of the total $478.3m net profit. It froze dividends in 2023 after a profit drop. Equity paid a $123.8m dividend, a modest 6% annual increase, while NCBA offered $70m. 'The low dividends are part of a long-term strategic plan targeting a stronger capital base now that regula- tors in various countries are increas- ing minimum capital requirements for banks,' argues Chokaa at Capital A Investment Bank. 'We also antici- pate that Kenyan lenders, primarily KCB and Equity, will pursue future acquisitions in Ethiopia or markets where they have weak penetration,' he adds. Amid impressive performances, many external subsidiaries may soon begin con- tributing dividends to their parent banks in Kenya. Aside from the Kenyan unit, Equity currently receives dividends from Rwanda and South Sudan, with Mwangi noting that the other subsidiaries are 'ac- cumulating capital and retaining every- thing to sustain growth.' KCB also expects its Rwanda, Tanza- nia and DRC units to start contributing dividends in 2025. However, the CEO says DRC might be exempt, given the ongoing military wars. Dividend payment by external sub- sidiaries is 'something that gong forward will be a push and that will improve our pay-out ratio ultimately,' says Lawrence Kimathi, KCB's CFO. n Nearly all Kenya's banks witnessed a surge in external profits in 2024, with Equity Group generating the highest at Ksh24.4 bn ($188.9m). There are still stark risks for banks in DRC and South Sudan, as military clashes intensify amid faltering peace talks. © Copyright IC Publications 2022 Provided by SyndiGate Media Inc. (
Zawya
01-07-2025
- Business
- Zawya
KCB, Equity race to prop up Tanzania subsidiaries
Equity and KCB, the two publicly listed banks and the largest in East Africa, maintain a stiff ri- valry in regional operations: they currently share five markets: Tanzania, Rwanda, Uganda, the Democratic Republic of Congo (DRC), and South Sudan. KCB also has an additional unit in Burundi. Equity will inject $20m into its Dar es Salaam operation in 2025, while in Uganda, where the minimum core capital for commercial banks was raised six times to Ush150bn ($41.2m) in Novem- ber 2022, the subsidiary will receive $10m. Conversely, KCB will allocate a sig- nificant portion of the National Bank of Kenya (NBK) sale proceeds to capitalise its Tanzania unit. The NBK sale, ex- pected to conclude in 2025, is projected to generate about $125.4m, based on a binding valuation of 1.25% of its cur- rent book value. 'If you look at KCB Tanzania's full- year performance, profit went up by 20%. With additional funding, it can generate much more, probably upwards of about Ksh4bn in profit. So we have to fuel some of our businesses,' says KCB Group CEO, Paul Russo. The Tanzania unit was responsible for revenue inflows worth $48.6m and a net profit of Ksh2.6bn ($20m) in 2024, mak- ing it the third most profitable external subsidiary after the Democratic Republic of Congo (DRC) and Rwanda. For James Mwangi, Equity Group CEO, the new capital injection for Tanzania, which generated $9.3m in net profit in 2024, is meant to support growth given its 'immense potential'. 'Most of the regional markets are gen- erating enough cash to fund their growth. However, the occasional moment comes when we realise we need to support them to move to the next level,' he explains. Tanzania's large population, its grow- ing GDP – which has outpaced Kenya – and its close connection to the $2.3bn Lobito Corridor rail project, make it par- ticularly attractive for lenders seeking growth opportunities. Kenya's GDP growth was the lowest in East Africa at 4.7% in 2024, compared to Tanzania's projected 5.4%. Last Oc- tober, President Samia Suluhu Hassan's administration announced an interest in joining the Lobito Corridor project to help connect the agricultural and min- ing countries with global markets via the Indian Ocean. Supported by a consortium that includes the US government, Africa Finance Corporation, and the AfDB, the Lobito project connects three mineral- rich nations – Angola, Zambia and DRC, where Equity is the second-largest bank. 'It [Tanzania] is a country that has 11 neighbouring countries, and it is impor- tant we align ourselves with its strategic position,' says Mwangi. Brent Malahay, the Group's Chief Strat- egy Officer, stated in November 2024 that in the next three years, the Group will be 'looking at strengthening its presence in the region (Lobito corridor) to create a complete ecosystem.' KCB's Russo says: 'For us, the growth opportunity today is Tanzania. It is mas- sive in terms of population. Just look at the good performance over the last 3-4 years.' Equity, with a total asset base of Ksh1.8trn ($13.9bn), has consistently maintained a superior market position compared to KCB in nearly all shared ex- ternal subsidiaries except in Tanzania and South Sudan. The Group, which began operations in Tanzania in February 2012, holds a modest 1.7% market share compared to KCB's 2.3%. Externalising domestic competition This new race to increase capital in Tanzania reflects KCB and Equity's growing competitiveness that started domestically, where a subdued eco- nomic context has hampered perfor- mance and pushed lenders to explore external options to mitigate risks. However, the Tanzanian market continues to present challenges, despite decades of Kenyan banks attempting to grow organically. Various factors, including lower integration, regulatory obstacles, and a lack of strategic acquisi- tions, have all contributed to the slug- gish penetration of Kenyan lenders in this market. The gradual shift of capital from Dodoma to Dar es Salaam – which hosts most bank branches – has also partly disrupted lenders' operations, especially regarding government-related businesses. Currently, NMB Bank and the Coop- erative Rural Development Bank (CRDB) dominate the Tanzanian market, collec- tively commanding approximately 43% of the total size. 'Tanzania is a challenging market. In 2025, the Group will be putting a lot of focus on Tanzania,' says Equity's Mwangi. While Equity expects its Tanzania units to retain all earnings to bolster near-term growth, KCB CEO Paul Russo anticipates dividend inflows from the Tanzanian sub- sidiary within the next two years. © Copyright IC Publications 2022 Provided by SyndiGate Media Inc. (
Zawya
26-06-2025
- Business
- Zawya
Nigeria: Uche Orji appointed Non-Exec Director of Access Bank Plc
Group Holdings, said: 'This is a pivotal time for the Democratic Republic of Congo, and it is essential for Equity Group to support the Congolese government's efforts to foster the country's growth as defined by the National Development Plan (NDP) for 2022-2026.' Equity Group Holdings Plc, with its Africa Recovery and Resilience Plan (ARRP), values the strategic importance of the DRC, particularly in the transition to green energy, the importance of its minerals, the global significance of its nature-based assets in the Congo River Basin and Virunga National Park, and the potential for food production to contribute to food security. In his new role, Meti will oversee EquityBCDC's expansion as it implements strategic initiatives to reach its ARRP objective of impacting 30m people in the DRC by 2030. Access Holdings Plc has appointed Uche Orji as an Independent Non- Executive Director of Access Bank Plc, the Nigerian multinational bank with subsidiaries in nine African countries, as well as the UK. Orji is a well-known investment banking professional, information technology entrepreneur, and finance expert with three decades of business and board experience. He is the Co-founder and Partner of Titangate Capital Management, an equity firm that invests in deep-tech, enterprise software, semi-conductors, hardware, and artificial intelligence companies. He is also the Founder and Director of Vitesse Africa Ltd, an investment advisory firm focused on African energy, technology and infrastructure sectors. He currently serves as a board member and investor in Ultrasafe AI, an artificial intelligence/ IT development firm that maintains strategic collaborations with leading technology companies. His other board memberships include the Private Infrastructure Development Group (PIDG), London. He began his career as an Audit Trainee at Arthur Anderson & Co, before becoming Acting Financial Controller at Diamond Bank in Nigeria. He took his degree in chemical engineering at the University of Port- Harcourt, Nigeria and holds a Master of Business Administration from Harvard Business School, USA. Orji is a well-known investment banking professional, information technology entrepreneur, and finance expert with three decades of business and board experience. © Copyright IC Publications 2022 Provided by SyndiGate Media Inc. (
Zawya
26-06-2025
- Business
- Zawya
Equity gets shareholders' nod to open office in UAE
Equity Bank Group's shareholders have approved its plans to open a representative office in the United Arab Emirates (UAE), moving it closer to its first expansion beyond Africa in growth drive. Awaiting regulatory approval by the Central Bank of Kenya and the Emirati regulator, the representative office will enable Equity Bank to fund Kenyan and East African firms and investors with business interests in the Emirates and even for foreign traders, expanding its market base and customer portfolio. A representative officer is a physical presence for a bank in a foreign country that serves as a marketing and liaison point but is not allowed to conduct banking business such as deposit-taking or lending for local banking customers. The bank said the expansion into the Gulf nation is meant to enable it 'to facilitate business, trade and investment opportunities between East and Central Africa, the UAE, and the wider Middle East, India, Central and South Asia regions.''The establishment of a representative office in the UAE marks a strategic step in deepening regional and global connectivity. With our shareholders' continued trust, we are confident in our ability to drive meaningful transformation, sustainable development, and long-term value creation across the continent,' said Equity Group Chairman Isaac Macharia. Equity Bank will be the first Kenyan lender with a representative office in the Middle East, marking a major milestone for the country's financial industry. Currently, Equity has a representative office in Addis Ababa. The lender's shareholders also approved the proposed dividend of Sh4.25 per share, paving the way for the payment of Sh16 billion in dividends by the end of June. They also elected six new members of the board of directors – Faridah Khambata, Nick O'Donohoe, Aloysius Uche Ordu, Obadiah Barara, Lakshmi Shyam-Sunder, and David Mutombo.→ vogweno@ © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
