Rwanda tops Kenyan banks’ Profit totals

According to a recent report by the Central Bank of Kenya (CBK), Rwanda contributed the highest amount of profit earnings for Kenyan bank subsidiaries in East Africa and beyond last year.

As of December 31, 2022, the regional subsidiaries of Kenyan banks reported a combined pre-tax profit of Sh32.51 billion, up 88.65 percent from the Sh.17.23 billion reported on December 31, 2021, according to the CBK.

“Rwanda contributed the highest earnings capacity recording Sh.10.16 billion in profits, translating to 31.26 percent of the total profits. Subsidiaries operating in DRC (Democratic Republic of Congo) and Uganda contributed 30.10 percent and 16.11 percent of the total profits respectively while subsidiaries in South Sudan contributed 14.28 percent of the total profits” the CBK said.

A number of Kenyan banks have increased their reach into partner nations of the East African Community (EAC) as well as international markets like Mauritius, Malawi, and Mozambique.

The Co-operative Bank of Kenya with a presence in the EAC is one of these banks, along with KCB Group, Diamond Trust Bank, NCBA, Guaranty Trust Bank Kenya Limited, Equity Group, I&M Holdings Plc, and African Banking Corporation Limited.

Some lenders in Kenya, like I&M and Prime Bank Limited, have reached beyond the EAC’s purview. For instance, I&M owns a 50% stake in Mauritius’ Bank One Limited, while Prime Bank owns 10.6% of Malawi’s First Capital Bank, 6.62 percent of Botswana’s First Capital Bank, and 5.0 percent of Mozambique’s First Capital Bank SA.

According to the CBK report, Kenyan bank branches in Burundi, Tanzania, and Mauritius were the least profitable and contributed, respectively, 4.50 percent, 2.82 percent, and 0.93 percent of the total profits.

“Three subsidiaries registered a combined loss of Sh2.4 billion. Out of the three loss-making subsidiaries, two were operating in Tanzania and one in Uganda” the regulator said.

The CBK report stated that as of December 31, 2022, the total assets of Kenyan bank subsidiaries abroad were Sh1.61 trillion, up from Sh1.21 trillion as of December 31, 2021.

“A significant contributor to the asset base was Equity Group Plc’s subsidiary in DRC, Banque Commerciale Du Congo -BCDC with total assets of Sh442 billion and KCB Group Plc’s subsidiary in DRC, Trust Merchant Bank with total assets of Sh212 billion,” it said.

In December 2022, the Kenyan banks’ subsidiaries had a combined deposit base of Sh1.28 trillion, up from Sh940 billion in December 2021.

A total of Sh365 billion, or 28% of all deposits made by subsidiaries in the host countries, was contributed by Equity’s subsidiary in the DRC, Banque Commerciale Du Congo (BCDC), and Sh180 billion, or 14% of all deposits made by subsidiaries in the host countries, was contributed by KCB Group’s subsidiary in the DRC, Trust Merchant Bank.

At Sh725.8 billion as of December 31, 2022, the total gross loans for the host country subsidiaries increased by 42.2 percent from Sh510.3 billion as of December 31, 2021.

The DRC operations of the Kenyan banks’ subsidiaries saw the highest level of gross loans at Sh. 244.5 billion, or 33.69 percent of the gross loans made by all the subsidiaries outside of Kenya.

Twenty-three percent of the gross loans came from subsidiaries with operations in Tanzania. 17.16% and 16.53% of the total loans were made to Uganda and Rwanda, respectively. Gross loans to Mauritius totaled Sh73.1 billion, or 10.07 percent of total loans.