Kenyan banks making strides in EAC as profits surge by 104% in a year

Kenyan banks are reaping big from their regional subsidiaries in the East African Community (EAC), highlighted by the increasing profits, which more than doubled in the one-year period to December 2023.

Data by the Central Bank of Kenya (CBK) shows the regional subsidiaries gross profit stood at Sh66.13 billion, a 103.4 per cent increase from Sh32.51 billion reported in 2022.

The trajectory was attributed to the number of branches of the Kenyan bank subsidiaries growing year-on-year.

"In the period under review, DRC contributed the highest earning capacity, recording Sh30 billion in profit, translating to 45.52 per cent of the total profits," the 2023 bank supervision report reads.

Subsidiaries operating in Rwanda and Uganda contributed 20.89 per cent and 13.45 per cent of the total profits, respectively, while subsidiaries in Tanzania contributed 8.53 per cent of the total profits.

Subsidiaries operating in South Sudan, Mauritius, and Burundi were the least profitable and contributed 6.67 per cent, 3.40 per cent and 1.56 per cent, of the total profits, respectively.

The total assets of the subsidiaries stood at Sh2.3 trillion as of December 2023, compared to Sh1.6 billion in the same period last year.

"DRC now accounts for most regional assets at 39.3 per cent in 2023 compared to 40.5 per cent in 2022," the report adds in part.

The combined gross loans for the subsidiaries in the host countries stood at Sh1.1 trillion in the period under review, an increase of 52.2 per cent from Sh725.8 billion in 2022.

The Kenyan banks' subsidiaries operating in the DRC recorded the highest level of gross loans at Sh402 billion, accounting for 36.4 per cent of gross loans in all the subsidiaries outside Kenya, followed by subsidiaries operating in Tanzania, which accounted for 18.6 per cent of the gross loans.

Rwanda and Uganda accounted for 17.4 per cent and 16.1 per cent of the gross loans, respectively.

Mauritius recorded gross loans of Sh102 billion, accounting for 9.3 per cent of gross loans.

Nevertheless, the report highlights that the Kenyan banks' subsidiaries accounted for a combined deposit base of Sh1.8 trillion in 2023 compared to Sh1.3 trillion in 2022.

Notably, the number of branches of Kenyan banks subsidiaries in EAC partner states and the DRC grew by 11.7 per cent from 552 branches recorded in 2022 to 654.

"The growth was mainly driven by the opening of new branches by KCB Group's Trust Merchant Bank in the Democratic Republic of Congo," the CBK report notes.

In addition to having a presence within the EAC Partner States and DRC, some of the Kenyan banks, such as I&M Holdings Plc and Prime Bank Limited, have expanded beyond the EAC jurisdiction.