Net assets-wise, KCB surpasses Safaricom

Following the consolidation of its Congo DRC acquisition and strong loan growth in other regional subsidiaries, KCB has surpassed Safaricom in terms of net asset value.

According to the lender’s full-year financials for 2022, its net assets—defined as total assets minus total liabilities—rose to Sh206.28 billion by the end of December from Sh173.5 billion a year earlier.

As of the six months ending in September 2022, when Safaricom released its most recent financial results, it had net assets worth Sh186.79 billion on its books. Safaricom is the largest publicly traded company in Kenya by market capitalization. A year earlier, it had net assets worth Sh178.8 billion.

However, Safaricom trades at a significantly higher premium on the Nairobi Securities Exchange, where it is valued at Sh725 billion as of Friday, which is 6.3 times KCB’s Sh113 billion.

With the purchase of an 85% stake in Trust Merchant Bank (TMB), which was finalized in December of last year, KCB entered the DRC market.

The purchase price was 1.49 times the DRC lender’s book value, or net assets, which, as of the end of 2021, totalled Sh14.15 billion. At this multiple, the acquisition was valued at Sh17.9 billion.

Following KCB’s purchase of Rwandan lender Banque Populaire du Rwanda (BPR) from London-listed financial services company Atlas Mara Limited in August 2021, the DRC entered the market only a few months later.

The Rwandese acquisition was combined with KCB’s local subsidiary that already existed and given the new name BPR Bank.

The telco and the bank, as well as Equity Group, which reported net assets worth Sh182.2 billion at the end of last year, have all recently entered new markets, creating opportunities for new assets on their books.

Equity’s venture into the Democratic Republic of the Congo, where it owns the subsidiary Equity BCDC, has given it its most lucrative unit outside of Kenya.

The DRC also houses KCB and Equity’s largest operations outside of Kenya, demonstrating the market’s growing significance for Kenyan companies and lenders.

According to KCB’s disclosures, as of December, TMB held 13.5% of KCB’s total assets, which stood at Sh1.55 trillion. 30% of Equity Group’s total assets, worth Sh1.447 trillion during the period, were made up by Equity BCD.

Safaricom, however, outperforms both lenders in terms of profitability, despite the fact that the gap has closed over the past two years.

As opposed to 3.66 times more in 2020, when the telco’s profits peaked, the telco’s profit of Sh67.5 billion in the year ended March 2022 is now 1.46 times that of equity (Sh46.1 billion for the year ended December 2022).