The Democratic Republic of Congo (DRC) is now the most profitable market for subsidiaries of Kenyan banks within the East African Community (EAC) ahead of Rwanda.
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According to the Central Bank of Kenya’s (CBK) Bank Supervision Annual Report 2023, the pre-tax profit realized in the DRC market by subsidiaries of Kenyan banks more than doubled to KES 66.13 billion ($504.81 million) in 2023, from KES 32.51 billion ($248.17 million) in 2022.
Here is the breakdown of subsidiaries contributions as per the CBK report:
- The DRC market contributed the highest proportion of the total earnings by Kenyan banks’ regional subsidiaries, equivalent to 45.52 percent (KES 30 billion or $229 million).
- Rwanda – 20.89 percent
- Uganda – 13.45 percent of the total profits, while
- Tanzania – 8.53 percent
- South Sudan – 6.67 percent
- Mauritius – 3.40 percent
- Burundi – 1.56 percent
The Rwandan market had been Kenya’s profitable banking market from 2017 to 2022, while Tanzania and South Sudan topped the earnings list in 2016 and 2015 respectively, according to CBK data.
Kenyan banks first entered the Congolese banking market in 2016, when Equity Group acquired 86.6 percent stake in a German bank-ProCredit and renamed the subsidiary Equity Bank Congo (EBC) SA.
Equity Group then acquired a 66.53 percent stake in another Congolese lender, Banque Commerciale Du Congo (BCDC), which was the largest lender in the country by assets, in August 2022, and merged the two subsidiaries to form a new bank, EquityBCDC
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KCB Group entered the market through the acquisition of 85 percent stake in the Trust Merchant Bank in December 2022.
The scramble for the DRC market by the region’s big banks deepened after DRC joined the EAC in 2022.
“DRC offers a market of over 80 million people that EAC SMEs can tap into.
DRC will also join the larger EAC Common Market and Common External Tariff framework, bringing it benefits such as free movement of persons and goods across EAC Partner States,” EAC SG- @pmathuki pic.twitter.com/J3RUXAyDcE— East African Community (@jumuiya) August 31, 2021
Following this move, Tanzania’s largest retail bank by assets, CRDB, also set up a subsidiary in the large commercial city of Lubumbashi in southeast DRC, in 2023.
In Rwanda, KCB acquired a 62.06 percent stake in Banque Populaire du Rwanda (BPR) from the British financial services conglomerate Atlas Mara Ltd in 2021 and later increased the stake to 76.67 percent by acquiring additional shares from the minority shareholders.
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