Financial services firm NCBA Group Plc has pumped KSh5.6 billion ($41.89 million) of additional capital into its operations in Rwanda, Uganda and Tanzania to ready itself for mounting competition from rivals such as Equity and KCB banks.
The move is part of efforts by the lender to shore up its regional retail banking business and avert more financial bleeding through the struggling subsidiaries.
NCBA, which is listed on the Nairobi Securities Exchange (NSE), disclosed in its annual report that its combined investment in Rwanda, Uganda and Tanzania increased by KSh3.27 billion ($24.46 million) in 2022 and KSh2.33 billion ($17.43 million) in 2021.
Last year, the lion’s share of the additional funding totalling KSh2 billion ($14.96 million) went to strengthen operations in the Tanzanian subsidiary, whose losses worsened to KSh1.77 billion ($13.24 million) from KSh1.15 billion ($8.6 million) in 2021.
NCBA also pumped an additional KSh813.49 million ($6.08 million) into the Ugandan subsidiary and KSh457.26 million ($3.42 million) in Rwanda.
Profits and losses
In 2022, the group injected KSh2.33 billion ($17.43 million) in regional operations comprising Tanzania, Uganda and Rwanda. Audited financial statements show the group’s net profit for the year ended December 31, 2022 grew by 34.76 percent to KSh13.77 billion ($100.05 million) from KSh10.22 billion ($77.42 million) in 2021 on the back of increased income on forex trading and investment in government securities.
The bulk of the earnings KSh14.5 billion ($108.48 million) were generated by the Kenyan operations. Ugandan subsidiary returned a net profit of KSh767.58 million ($5.74 million) from a loss of KSh483.24 million ($3.61 million) in 2021, while the Rwandan subsidiary increased its net profit to KSh467.11 million ($3.49 million) from KSh83.39 million ($623,673.81) in 2021.
The loss-making subsidiaries in Uganda, Tanzania and Rwanda narrowed their combined losses to KSh1 billion ($7.48 million) in 2020 from KSh2.55 billion ($19.07 million) in 2019.
East Africa’s biggest retail banks KCB and Equity Group are still cautious to protect their finances, even after a bumper year (2023) in which the lenders reaped big in profits.
The two lenders with an expansive network in the East African region have kept $154 million in statutory loan reserves to take care of the ‘uncertain’ business environment characterised by rising inflation, growing interest rates, weakening currencies and a shortage of the US dollar.
NCBA Group Plc has operations in Kenya, Tanzania, Uganda, Rwanda, Ivory Coast and Ghana through its subsidiaries NCBA Bank (Tanzania), NCBA Bank (Uganda), NCBA Bank Rwanda Plc, Bridge Microfinance (Cote d’Ivoire) and LOOP DFS Ghana.
Bridge Microfinance is jointly owned by NCBA Bank Kenya Plc (35 percent shareholding) and Bridge Group West Africa (65 percent shareholding).