NAIROBI, Rwanda, Democratic Republic of Congo (DRC) and Burundi, are emerging as the best markets for Kenyan banks, expanding across Africa, as Uganda and Tanzania, once-lucrative market falter, says a new study.
Increased competition from local players in Uganda and Tanzania made the business environment tough for Kenyan banks, with profits from the country shrinking, the Banking Supervision Report 2018, released by the Central Bank, shows.
The report reveals that, while Kenyan banks regional subsidiaries registered a 31.5 percent increase in total profit before tax, which stood at 11.57 billion shillings (113 million U.S. dollars), as of Dec 31, 2018, up from 85 million dollars in 2017, Uganda contributed the least.
The improvement in profitability was specifically from subsidiaries in the Democratic Republic of Congo, Burundi, Rwanda and Mauritius. Uganda topped the list of loss-making subsidiaries, thus recording the lowest increase in profits, said the central bank.
The profitability of subsidiaries in South Sudan significantly improved in 2018, attributable to the peace initiatives, and improvement in the macro-economic environment that saw political risks decline.
Rwanda contributed the best earnings capacity, despite having fewer subsidiaries compared to Uganda and Tanzania, according to the Central Bank.
Its subsidiaries accounted for 273 million dollars in profits, 24.12 percent of the total profits.
However, despite the loss, Uganda remained the country with the highest number of subsidiaries in the region, at 104, followed by Tanzania at 76 and Rwanda at 56.
The subsidiaries have a total of 6,301 employees, a 3.2 percent increase, compared to 6,106 the year before.
The increase was attributed to the additional branches in Uganda and Rwanda in 2018. Uganda had the highest number of subsidiaries’ bank employees at 2,073, compared to 1,879 in 2017. This accounted for 33 percent of the total number of employees, as Uganda has the largest proportion of subsidiaries’ branches in the region, said the apex bank.
Source: NAM News Network