Equity Bank’s #ticker:EQTY three-year-old subsidiary in the Democratic Republic of Congo (DRC) has become its most profitable subsidiary, the lender has disclosed, underlining the potential in the resource-rich central African nation.
Equity Bank Congo made a Sh700 million profit before taxation in the six months ended June, a 140 per cent growth compared to the same period last year. The DRC business has powered ahead of Uganda’s which grew by 24 per cent to Sh680 million, Rwanda’s 58 per cent to Sh440 million, Tanzania’s 41 per cent to Sh360 million, and South Sudan’s 224 per cent to Sh150 million.
Equity entered into the war-prone DRC in September 2015 after acquiring a 79 per cent stake in SME-focused ProCredit Bank in a Sh4.5 billion share swap deal that saw it issue 70.8 million shares to investors in the subsidiary. The Nairobi Securities Exchange listed firm injected a further $21 million (Sh2.12 billion) in cash a year later, raising its stake to 86 per cent.
More than 90 per cent of the population in the vast resource-rich country is unbanked, making her a rich market for retail banking.
The subsidiary, which has 41 outlets, has partly been riding on processing of the government’s payments. Equity Group Executive Director for Subsidiaries Mary Wamae said the lender was deepening agency and mobile banking models to net more business.
“It is a very cash economy. We are digitising that process through mobile and agency banking, and most of (government) payments are already passing through the bank and we are also paying civil servants,” she said. “We are learning a few tricks from the DRC because they have been able to do very well in the past with their SME model and that will continue.”
Equity Bank subsidiaries accounted for 18 per cent of the lender’s half year profit, up from 13 per cent in a similar period a year ago as its diversification plan starts to bear fruit.