Rwanda is now the most profitable market for Kenyan bank subsidiaries in the region, overtaking Tanzania where the lenders face a challenging business environment.
Offshoots of local lenders in Rwanda helped contribute 29 per cent of the Ksh8.79 billion ($87.2 million ) pre-tax profit 305 bank units in the region netted last year.
Kenyan banks in Rwanda include Equity Bank, I&M, KCB Group and Uhuru Kenyatta family-owned Commercial Bank of Africa (CBA).
CBA spent nearly Ksh1 billion ($10 million) to acquire Crane Bank Rwanda.
The country was the best earnings contributor last year despite having the fewest subsidiaries compared to Uganda and Tanzania — which was the best performing market in 2016.
Data from the Central Bank of Kenya shows that Rwanda has 55 subsidiaries, behind Tanzania with 81 and Uganda with 105.
“Subsidiaries operating in Rwanda accounted for the highest profits at 29.44 per cent of the total profits.
“Subsidiaries operating in Uganda accounted for 19.54 per cent…subsidiaries in Tanzania accounted for 17.85 per cent of the total profits,” read a recent report by the regulator.
Increased tax bills by the Tanzanian government made it tough for foreign investors in the country last year.