KCB Group invested an additional Sh2.7 billion into its Rwandan subsidiary last year, raising its stake in the business to a new high of 87 percent.
The Nairobi Securities Exchange-listed firm previously held a 77 percent stake in BPR Bank Rwanda Plc which was created last year from the merger of the former KCB Bank Rwanda and Banque Populaire du Rwanda (BPR).
The Kenyan banking multinational says in its latest annual report that its investment in the Rwandan subsidiary rose to Sh7.5 billion in the year ended December 2022, up from Sh4.8 billion the year before.
The transactions signal KCB’s plan to consolidate its ownership of the bank, with the minority shareholders it has been buying out consisting of the former owners of BPR.
KCB previously owned 100 percent of KCB Bank Rwanda.
It acquired a 62.06 percent stake in BPR in 2021 before implementing the merger of the two institutions and subsequently raising its ownership in the combined business now trading as BPR Bank Rwanda.
The multinational has said it seeks to capitalise on the market that has proven more lucrative than other countries where it has operations outside of Kenya, with increasing returns.
“Fast-growing markets such as Rwanda offer immense opportunities to earn higher returns on investment,” the bank says in the report.
“This larger market share has enabled the bank to accelerate its contribution to the group, making it the second most profitable subsidiary after KCB Bank Kenya.”
BPR Bank Rwanda is now the second-largest lender in Rwanda and is also the most profitable subsidiary in the regional market for KCB.
The subsidiary recorded an 84.6 percent jump in net profit to Sh2.02 billion in the year ended December 2022 from Sh1.09 billion a year earlier on the back of higher interest income.
The bank’s net interest income jumped to Sh6.8 billion from Sh3.6 billion, reflecting the impact of increased lending.
Its loan book expanded to Sh54.9 billion from Sh40.4 billion.
KCB’s moves in Rwanda have been mirrored by Equity Group in the Democratic Republic of Congo where it also merged a newly acquired bank with an existing subsidiary before increasing its ownership in the merged entity.
The lender spent an additional Sh9.9 billion last year in EquityBCDC, raising its ownership in the subsidiary to 84.1 percent from the previous 77.7 percent. The larger stake arose from a rights issue as well as buyouts of minority shareholders.