Equity Group invested an additional Sh383 million in its Democratic Republic of Congo (DRC) subsidiary last year, underlining its confidence in that market which has become its most profitable outside Kenya.
The bank bought shares that were allotted to employees of Equity Bank Congo, its first DRC subsidiary that was later merged with Banque commerciale du Congo (BCDC) in which it acquired a majority stake in August 2020.
The Kenyan banking multinational renamed the merged entity to Equity BCDC.
“On December 30, 2021, Equity Group received regulatory approval to acquire shares previously held by Equity Bank Congo S.A. ESOP in Equity BCDC at a consideration of Sh383 million, increasing Equity Group’s shareholding in Equity BCDC to 77.5 percent (2020: 75.5 percent),” the bank said in its latest annual report.
The latest transaction has raised its cumulative investment in DRC to Sh17.3 billion, second only to Kenya where it has invested Sh40.7 billion.
Equity BCDC’s had the biggest earnings growth in the first quarter ended March, posting a 269 percent jump in net profit to Sh1.4 billion as its margins improved.
The DRC unit’s return on average equity rose to 19 percent in the review period from 6.2 percent a year earlier.
The subsidiary contributed 12.1 percent of the group’s Sh11.5 billion net income in the period, which represented a 33.7 percent rise from Sh8.6 billion.
Expansion in DRC is part of Equity’s strategy of pursuing growth and diversification in the regional market.
Equity says DRC’s economic prospects have brightened after the country joined the East Africa Community (EAC) in March. The country is rich in minerals and has a population of 93 million, with nearly half of the people concentrated in urban centres.
The Nairobi Securities Exchange-listed firm recently said it will invest an additional $100 million (Sh11.6 billion) in Equity BCDC.
The funds will strengthen the subsidiary’s capital base as it seeks to scale up its lending and other banking operations in DRC where it is the second-largest lender by assets.
The move will raise Equity’s cumulative investment in DRC to more than Sh27 billion, underlining its confidence in the future growth prospects in that market.
The announcement comes after the DRC was admitted as the seventh member of the regional bloc on March 29 during the virtual 19th Extraordinary Summit of East Africa Community Heads of State chaired by Kenya’s President Uhuru Kenyatta.