Nigerian bank UBA recorded its fifth consecutive loss last year while Togo-based Ecobank was firmly in the red for the second year running as West African lenders continue to sail in rough waters locally.
UBA Kenya made a net loss of Sh272 million in the period to December 2013, continuing its loss-making streak since it set up shop in Kenya in 2009.
Ecobank Kenya was Sh881 million in the red last year compared to the Sh1.05 billion loss posted in 2012, weighed down by lower interest income and increased operating expenses.
Mali-based Bank of Africa (BoA) saw its net profit for the Kenyan unit dip nearly two-thirds to Sh436 million last year, having made Sh702 million in 2012.
The mixed fortunes also saw Lagos-headquartered Guaranty Trust (GT) Bank’s Kenyan subsidiary report a 45 per cent drop in net profit to Sh253 million last year from Sh466 million in 2012.
GT Bank in July last year acquired a 70 per cent stake in Fina Bank for $100 million (Sh8.6 billion), with an eye on the East African Community given that the Kenyan bank had operations in Rwanda and Uganda.
“They are yet to gain traction in the Kenyan market given that they are new entrants in a very competitive banking market.
“The West African banks are up against established players,” said Francis Mwangi, an analyst at the Standard Investment Bank.
Ecobank Kenya’s net interest income increased 21 times to hit Sh901 million last year, while UBA’s grew nearly six fold to Sh121 million. But the gains were wiped out by surging operating expenses.
The poor show has forced Ecobank to twice in as many years turn to its parent Ecobank Transnational Incorporated (ETI) for additional capital totalling Sh2.1 billion to finance the rollout of new branches and increase lending capacity as it races to spring back to profitability.
GT Bank had its net interest income jump by a third to Sh1.8 billion compared to BoA’s, which grew 12 per cent to Sh3.1 billion.
Interestingly, these West African multinationals are some of the biggest and most profitable banks in their home markets.
Management experts attribute the failure to their overreliance on expatriates from their headquarters to run Nairobi operations, resulting in a culture gap.
“The cultural differences may have affected their market strategies, products and services as well as their adaption in the Kenyan market,” said David Muturi, the chief executive of the Kenya Institute of Management (KIM).
Ecobank—which entered the Kenyan market in mid-2008 when it acquired the loss-making EABS—in May last year appointed Ivorian Ehouman Kassi as MD for the local unit.
Mr Kassi succeeded Anthony Okpanachi from Nigeria who was at the helm since its entry. GT Bank in January appointed Nigerian Adekunle Sonola as CEO.
Ghanaian Kwame Ahadzi joined BOA Kenya as chief executive in April 2009. BoA started its local operations in 2004 after it acquired Credit Agricole Indosuez (K) Ltd
Tunji Adeniyi, a Nigerian, is currently at the helm of UBA Kenya that set base in Kenya in 2009.