KCB, Equity Draw New Battle Lines In The DRC

 

By Kepha Muiruri

KCB is keen on toppling Equity Group as Kenya and the region’s largest lender by asset base as its acquisition spree continues.

The Democratic Republic of Congo (DRC) is proverbially the line in the sand in this faceoff with KCB set to enter the market through its recently announced binding agreement to purchase the Trade Merchant Bank (TMB).

While competition between the two may not be equated to a football duel, each of the banks has been keeping the other on their toes as the supremacy crown remains on the line.

Presently, Equity sits on top of the table as KCB pushes to dislodge it..

Having closed its acquisition of the Popular Bank of Rwanda (BPR), now BPR Bank Rwanda Plc, and with the TMB acquisition in queue, KCB is fancying its chances of taking over the reigns as Kenya and Eastern Africa’s largest bank.

This week, KCB Group Managing Director Paul Russo put clear the Group’s ambition to rise from the runner’s up position on the back of the regional expansion drive.

“The naysayers will start seeing the real transformation and delivery in Rwanda. In my own words, I say we want to be number 1.5 by the end of the year and by next year, number one should feel the pressure,” he said.

“There has to be a significant difference between us and number three so that we are not compared with them. There is a reason we made an acquisition and we know exactly what we want to do.”

For Equity, the DRC is its most profitable market outside Kenya with the unit known as Equity BCDC posting a Ksh.3 billion net profit in six months to the end of June.

The unit became the most profitable regional unit for the Dr. James Mwangi-led bank following the acquisition of BCDC.

Meanwhile, KCB is aiming to replicate ‘King James’’ outcome in the DRC through the TMB purchase.

Presently, Rwanda is KCB’s most profitable subsidiary in the region after it purchased BPR.

“Ours is to bring technology, the first thing will be upgrading the core banking system and we are already doing that,” added Mr. Russo.

“The first things you do when you get in are to takeover, control and take charge. One then puts levers of control to continue doing the good but not the wrong things along the way.”

Head to head (H2H)

Citizen Digital compared 7 metrics between the two banks at the half year stage with Equity taking the game with a 5-2 score line.

The bank topped in assets, customer deposits, operating income, net profit and asset quality across the six months of operations with KCB getting on the score sheet with a greater loan book and lower costs.

On profitability, Equity Group’s higher earnings of Ksh.23.7 billion in contrast to KCB’s Ksh.19.5 billion put it on the driving seat with operating income at Ksh.65.6 billion.

Equity’s asset base of Ksh.1.334 trillion also trounces KCB’s Ksh.1.21 trillion with the balance sheet margins being shallower.

KCB’s addition of DRC’s Trade Merchant Bank is set to bring its balance sheet much closer to Equity even as the market leader might just stay ahead through organic growth barring further acquisitions.

In third and fourth spot, NCBA overtook Co-operative Bank to become Kenya’s third largest lender with an asset base of Ksh.604.3 billion in six months to June.

The difference to fourth is however nearly negligible with Co-op holding assets worth Ksh.603.9 billion at the half year stage.