African markets

KCB Group takes 77% stake in merged Rwandan lender

KCB Group took a 77% stake in BPR Rwanda, the subsidiary resulting from the merger of KCB Bank Rwanda and Banque Populaire du Rwanda (BPR).

The Nairobi Stock Exchange listed company previously owned 100% of KCB Bank Rwanda. It acquired a 62.06% stake in Banque Populaire du Rwanda (BPR) last year for a total cost of 5.3 billion shillings.

It recently merged the two subsidiaries to create BPR Rwanda whose owners include former BPR minority investors whose interests were transferred to the unified bank.

KCB had acquired the majority stake in BPR from institutional investors Arise BV and Atlas Mara Limited. Ownership changes resulting from the consolidation of Rwandan banking operations were disclosed by the Kenyan multinational banking corporation in its latest annual report.

The acquisition of the Rwandan bank helped KCB’s investment in subsidiaries increase to 87.9 billion shillings in the year ended December, from 79.6 billion shillings the previous year.

“Having completed the acquisition of BPR during the year, the new subsidiary added Sh21 billion of net loans and Sh26 billion of customer deposits to our group balance sheet,” KCB said.

Additionally, the acquisition contributed 477 million shillings of pre-tax profit to our net income for the five months of 2021 where we consolidated the results of the bank in our books after the acquisition, bringing the total contribution from our subsidiaries outside of KCB Bank Kenya at 14 percent and on track towards our 20 percent target.

BPR Rwanda is now the second largest lender in Rwanda and is also the most profitable subsidiary in the regional market.

The Kenyan multinational banking corporation saw its pre-tax profits from Rwanda – comprising the results of the two institutions before their merger – increase by 71% or 450 million shillings to reach 1.08 billion shillings in the year ended December.

BPR was among the banks that KCB was seeking to acquire as part of its regional growth and diversification strategy.

The bank is currently pursuing an acquisition in the Democratic Republic of Congo (DRC) after a takeover in Tanzania was canceled due to regulatory hurdles.

The KCB and other major banks like Equity Group are expanding aggressively in the region, seeking diversification and growth in neighboring countries.

However, local lenders still derive most of their profits from the local market, but the contribution of their foreign subsidiaries to consolidated profits is increasing.