Equity Bank eyes 20pc profits outside Kenya - The East African

Equity Bank eyes 20pc profits outside Kenya

Monday January 31 2011

Equity Banking Hall. It has been one of the fastest expanding banks since it converted into a bank in 2006. Photo/FILE

Equity Banking Hall. It has been one of the fastest expanding banks since it converted into a bank in 2006. Photo/FILE 

By Mwaura Kimani

Kenya’s Equity Bank hopes to derive at least 20 per cent of its profits from its regional operations this year, chief executive James Mwangi said recently.

Mr Mwangi said he expects the boost to come from further investment in Equity’s operations in Southern Sudan and Uganda, and the expected launch of branches in Tanzania and Rwanda in the first quarter of 2011.

The planned entry into the two countries is part of the bank’s wider strategy of rolling out its operations into the Comesa region over the next 10 years.

“Sudan contributed 5 per cent of our profits last year and this is likely to double in 2011,” said Mr Mwangi. “I see between 7.5 and 10 per cent coming from Uganda while Rwanda and Tanzania should bring in at least 10 per cent each two years after launch,” he added.

The strategy is seen by analysts as a move by Equity to end its over-reliance on the EAC’s biggest economy for its earnings.

While Equity is spreading to other countries, it hopes mobile banking and agency banking will be its biggest growth drivers in 2011.

“Winning in banking will require us to take our services closest to the people. Mobile and agency banking are the next frontier for growth in the sector,” said Mr Mwangi.

Ranked Kenya’s fifth largest bank by assets, Equity has continued to benefit from increased economic activity in Kenya to maintain its profit growth momentum. In October, the bank reported a surging profit of Ksh6.53 billion ($81 million) for the first nine months of 2010 — a 53 per cent jump from 2009 buoyed by interest income, strong economic activity commissions and lower costs.

Equity ventured into Southern Sudan in 2008 but only made profits last year — some Ksh130 million ($1.6 million).

The breakthrough encouraged the bank to seek further expansion in a region characterised by a low banking culture — out of a population of 12 million, only 50,000 have bank accounts.

In Sudan, it plans to open two new branches this year and double its branch network by the end of 2013, a feat it expects to achieve in a stable political environment in the country following the recent referendum.

In Uganda, where the bank has 45 branches, Mr Mwangi said it aims to raise the number of customers from the current 450,000 to 750,000.

Besides targeting a huge money transfer market that is coming up in the EAC, the bank has its sights trained on the rural areas in the expanded market especially among the youth, women and the agricultural sector.

Other banks such as Kenya Commercial Bank which has a presence in Rwanda and Uganda has set its eyes on regional expansion to grow its income.

KCB chief executive Martin Oduor-Otieno said the bank plans to expand its branch network in Sudan from 15 to 19 by June this year.

Kenya’s Cooperative Bank is also planning to set up operations in the region after receiving an approval to invest in Southern Sudan in February last year.