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KCB to inject up to Sh4bn to spur growth in Tanzania unit
Kenya Commercial bank (KCB) Group CEO Paul Russo makes his remarks during the banks Financial Year (FY) 2024 Results announcement at Radisson Blu Hotel on March 12, 2025.
Photo credit: Francis Nderitu | Nation Media Group
KCB Group plans to inject up to Sh4 billion to drive growth in its Tanzania unit following the Sh14.2 billion sale of its subsidiary, National Bank of Kenya (NBK) to Nigeria’s Access Bank.
KCB Tanzania currently has little headroom for growth due to a low capital buffer above the regulatory minimum. The Tanzanian unit had a total capital ratio of 14.9 percent, being 0.4percent above the statutory requirement of 14.5 percent.
Management of the group, which reported an eight percent net profit growth for the half year ended June 2025, said it was pushing to grow its market share in Tanzania to rank among the top five lenders in the market.
“The growth of Tanzania in the last five years gives its management grounds to ask us what is next. We believe that the business has an opportunity to grow more, and our ambition is to be top five, minimum number five in that market, and to achieve this, we have to give it fuel,” KCB Group CEO Paul Russo told an investor briefing.
The group said it would deploy between Sh3 billion and Sh4 billion received from the sale of National Bank of Kenya (NBK) to recapitalize the Tanzanian operation, as it did not want to get money from the shareholders nor debt.
Strategy shift in Tanzania, which now has board membership and top management heavily vested in local talent, has seen the country post double-digit growth in the last five years.
KCB concluded the sale of NBK on May 30 for Sh14.2 billion, which was pegged on NBK’s valuation as at the end of December 2024. With the transaction concluding five months later in May, the value is set to be higher.
Twenty percent of the proceeds from the NBK sale, being Sh2.8 billion, have been retained in an escrow account as surety till all details of the deal are thrashed, while Sh6.3 billion will be paid out as a special dividend to shareholders.
The group announced it will be paying a dividend of Sh4 per share, which is split into two, with Sh2 being an interim dividend, while Sh2 is the special payout from the NBK sale.
The group has been on a conservative dividend policy for the last four years, during which it has been deepening its presence in the region, especially in Rwanda and the DRC.
The group posted a net profit of Sh31.5 billion for the six months ended June, up from Sh29.1 billion in a similar period last year. KCB Group has operations in Kenya, Rwanda, the DRC, Uganda, Tanzania, Burundi, and South Sudan.
The Kenyan unit, which is the key contributor to the group’s performance, reported a net profit of Sh22.8 billion, up from Sh21.2 billion in the first six months of 2024. The regional subsidiaries' contribution remained at 28 percent of the net earnings despite growing to Sh8.6 billion, up from Sh7.9 billion.
DRC reported a net profit of Sh4.7 billion, Rwanda (Sh1.8 billion), Tanzania (Sh1.4 billion), Uganda (Sh901 million), South Sudan (Sh422 million), and Burundi (Sh397 million).
Two of its markets, South Sudan and the DRC, have had a turbulent period owing to political conflicts. In DRC, KCB said it had been forced to close 14 branches in the Eastern region, which has been affected by the unrest.
The bank's deposit base remained flat at Sh1.49 trillion, with its payment to customers declining 3.3 percent to Sh24.7 billion, riding on declining interest rates.
Its loan book expanded six percent to Sh1.09 trillion, earning it interest income of Sh70.5 billion. The group’s non-performing loans stood at Sh221 billion, up from Sh212 billion. Non-performing loans have been a headache for commercial banks owing to tough economic conditions in most East African countries.
