DRC Market Biggest For KCB, Most Profitable For Equity

 

Trust Merchant Bank SA (TMB) CEO Oliver Meisenberg, KCB Group Chairman Andrew Wambari Kairu and Central Bank of Kenya Governor Patrick Njoroge during the KCB Group transaction agreement documents exchange event following the acquisition of shares in DRC-Based Trust Merchant Bank (TMB), at the Nairobi Serena on December 19, 2022. 

The Democratic Republic of the Congo (DRC) has handed Equity Group and KCB Group their largest and most profitable operations outside the Kenyan market with the market setting itself apart from subsidiaries in other markets.

An analysis of the bank’s most recent set of financial results shows the DRC housed the operations with the most assets for both banks outside Kenya –and the most profitable unit for Equity in the region.

Disclosures by KCB for instance show the Trust Merchant Bank (TMB), which the lender acquired last year, held 13.5 percent of KCB’s total assets of Sh1.55 trillion as of December.

Further, TMB is larger than the National Bank of Kenya which is a KCB subsidiary domiciled in Kenya.

NBK ranks as the second largest subsidiary for KCB ahead of BPR Rwanda which also represents a recent acquisition, KCB Tanzania, KCB Uganda, KCB South Sudan and KCB Burundi.

By overtaking Rwanda this means that the DRC now represents the most lucrative opportunity for growth for the KCB outside the country.

For Equity, its DRC operation arising from the merger of its 66.53 percent stake in Banque Commerciale Du Congo in 2020 and Equity Bank Congo, is now the largest and most profitable market outside Kenya.

This is according to the disclosures in the nine months that ended in September. Equity is yet to release its 2022 full-year results.

The DRC operation which was renamed to Equity BCDC had an asset base of Sh409.1 billion and a net profit of Sh4.7 billion in the period ending September last year.

This represented 14 percent of the group’s Sh33.3 billion net income in the period.

It is second only to the Kenyan unit which posted a net profit of Sh24.2 billion.

Equity BCDC assets included a loan book of Sh151.6 billion and which had posted a 50 percent year-over-year growth compared to 2021.

Both Equity and KCB have leveraged on mergers and acquisitions to venture into the DRC market with geographic expansion underpinning the bank's recent growth.

Last December, KCB completed the acquisition of TMB for a value estimated between Sh15 billion and Sh20 billion or 1.49 times of the book value which handed KCB entry to the mineral-rich country.

On its end, Equity’s exploit in the DRC had begun with the acquisition of ProCredit in 2015 marking its entry into the market.