Rwanda contributed the highest volume of profit earnings for Kenyan banks' subsidiaries in East Africa and beyond last year, a new report by the Central Bank of Kenya (CBK) said.



The CBK said the regional subsidiaries of Kenyan banks posted a combined pre-tax profit of Ksh32.51 billion ($236.44 million) as of December 31, 2022, an increase of 88.65 percent from Ksh.17.23 billion ($125.31 million) reported on December 31, 2021.
“Rwanda contributed the highest earnings capacity recording Ksh.10.16 billion ($73.9 million) 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.

Several Kenyan banks have expanded operations in the East African Community (EAC) partner states and beyond in markets such as Mauritius, Malawi, and Mozambique.

These banks include KCB Group, Diamond Trust Bank, NCBA, Guaranty Trust Bank Kenya Limited, Equity Group, I&M Holdings Plc, African Banking Corporation Limited, and the Co-operative Bank of Kenya with a presence in EAC.
Some of the Kenyan lenders such as I&M and Prime Bank Limited have expanded beyond the EAC jurisdiction. For instance, I&M has a 50 percent shareholding in Bank One Limited in Mauritius, Prime Bank has a 10.6 percent shareholding of First Capital Bank Malawi, 6.62 percent shareholding of First Capital Bank of Botswana and 5.0 percent shareholding of First Capital Bank SA, Mozambique.

Least profitable units
The CBK report said that Kenyan bank units operating in Mauritius, Tanzania, and Burundi were the least profitable and contributed 4.50 percent, 2.82 percent, and 0.93 percent of the total profits respectively.

“Three subsidiaries registered a combined loss of Ksh2.4 billion ($17.45 million). Out of the three loss-making subsidiaries, two were operating in Tanzania and one in Uganda” the regulator said.

The CBK report said the total assets of Kenyan bank subsidiaries abroad stood at Ksh1.61 trillion ($11.71 billion) as of December 31, 2022, compared to Ksh1.21 trillion ($8.8 billion) 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 Ksh442 billion ($3.21 billion) and KCB Group Plc’s subsidiary in DRC, Trust Merchant Bank with total assets of Ksh212 billion ($1.54 billion),” it said.

The Kenyan banks' subsidiaries accounted for a combined deposit base of Sh1.28 trillion in December 2022 compared to Ksh940 billion ($6.84 billion) in December 2021.

Main deposit contributors
The main contributors of deposits were Equity's subsidiary in DRC, Banque Commerciale Du Congo -BCDC, with total deposits of Ksh365 billion ($2.65 billion) or 28 percent of the total deposits of subsidiaries in the host countries, and KCB Group’s subsidiary in DR Congo, Trust Merchant Bank, with total deposits of Ksh180 billion ($1.31 billion) or 14 percent of the total deposits of subsidiaries in the host countries.

The combined gross loans for the subsidiaries in the host countries stood at Ksh725.8 billion ($5.28 billion) as of December 31, 2022, an increase of 42.2 percent from Ksh510.3 billion ($3.71 billion) as of December 31, 2021.

The Kenyan banks' subsidiaries operating in DRC recorded the highest level of gross loans at Ksh.244.5 billion ($1.78 billion) accounting for 33.69 percent of gross loans in all the subsidiaries outside Kenya.

Subsidiaries operating in Tanzania accounted for 20.37 percent of the gross loans. Uganda and Rwanda accounted for 17.16 percent and 16.53 percent of the gross loans respectively. Mauritius recorded gross loans of Ksh73.1 billion ($531.64 million) accounting for 10.07 percent of gross loans.