Kenya’s biggest bank by market value plans to grow its customer base to 100 million by targeting small businesses and mining sectors in the Democratic Republic of Congo and Ethiopia.
Equity Group Holdings Plc, which has operations in seven African markets, plans to exploit lending opportunities outside its home base where risk-based pricing of loans remains out of reach two years after the government repealed a law on interest-rate caps that ate into margins.
By the end of this year, Equity wants to beat Rawbank Sarl to be the market leader in the DRC, the central African nation with a population of more than 90 million people, Chief Executive Officer James Mwangi said in an interview. Equity combined operations of its unit there with those of Banque Commerciale du Congo Sarl, in which it acquired a stake last year.
The merger of BCBD and Equity Bank Congo, formerly known as ProCredit, almost tripled the group’s cash and cash equivalents, and increased the amount of dollar loans to 41% of its book, Mwangi said.
“Becoming a systemic actor in all the markets we operate in means increasing the number of customers,” Mwangi said in the Kenyan capital, Nairobi. “With the insights, capabilities, and the competence that we’ve built within the bank, and with the ability to leverage on technology and innovation, we could be able to do what we did in Kenya for over a period of 30 years in 10 years.”
Equity will take an even shorter time to replicate Kenya’s success in Ethiopia when Africa’s second-most populated market opens up financial services to foreign investors, Mwangi said. The main driver of growth will be private-sector credit demand, he said.
In Kenya, private-sector lending is 27% of gross domestic product, compared with 42% before the East African nation’s government introduced the rate cap. A rapid increase is achievable if banks can be allowed to price loans to people currently considered risky borrowers appropriately, he said.
“The opportunity to bounce back to above 50% private sector to GDP should be achieved within two years,” he said.