KCB Group PLC has completed the acquisition of Banque Populaire du Rwanda Plc (BPR) from Atlas Mara Mauritius Limited and Arise B.V, days after announcing the doubling of its net profit in the six months to June 2021.
According to the Kenya-based regional bank, the acquisition follows the securing of the requisite regulatory approvals in Kenya, and Rwanda in what makes KCB Group the majority shareholder in BPR, Rwanda’s second-biggest bank, with effect from August 25, 2021.
KCB Group CEO and MD Joshua Oigara said that the completion of the transaction in Rwanda will give the Group a stronger edge in deepening the ongoing Group strategy to scale regional presence.
He added that combined history of BPR and KCB will take the Group to greater heights, and would give them a stronger edge to play a bigger role in driving the financial inclusion and economic empowerment agenda in the East African region
“This will increase our scale and improve our operating leverage by enabling us to deliver our existing retail and wholesale offerings to a wider base of customers in Rwanda while positioning the bank for sustainable growth in the long-term,” said Oigara.
BPR is a strong retail and SME Bank with the largest branch network in the sector and a long history spanning over 45 years in Rwanda.
The plan, said Oigara, is to eventually create one banking entity in Rwanda to be named BPR Bank by merging KCB Bank Rwanda and BPR.
The combined bank will become the second largest bank in the industry. KCB Group has appointed an integration committee made up of senior executives to spearhead the attainment of the single entity in Rwanda in the coming months.
Oigara added that the merger will provide current KCB Rwanda’s customers with access to a larger network of branches and agents across the country.
Additionally, KCB Group intends to acquire 100 percent shareholding of African Banking Corporation Tanzania Limited (BancABC) from ABC Holdings Limited (96.6 percent) and Tanzania Development Finance Company Limited (3.4 percent).
The proposed acquisition is however pending some approvals.
Oigara added that the acquisition of BPR and BancABC provides KCB with the opportunity to rapidly scale up its balance sheet and revenue streams while leveraging on cost synergies, effectively putting it and all its stakeholders on a path to greater prosperity.
The acquisition’s announcement has been made days after the Group announced its Half year results for 2021.
During the period, the regional bank doubled its profit after to reach Sh15.3 billion, up from Sh7.6 billion posted during a similar period last year.
During the period under review, revenues increased by 14 percent on account of higher interest income driven by an increase in earning assets and a lower cost of funding.
The Group’s total income increased by 13.7 percent to Sh51.2 billion during the period, with net interest income going up by 17.7 percent to Sh36.6 billion from Sh31.1 billion last year.
This was on the back of higher interest-earning assets and effective management of the cost of funding during the period.
The Group’s assets stood at Sh1.02 trillion, up from Sh953 billion reported in the first half of 2020.
Oigara said the bank’s resilient and diversified nature has helped them navigate the unfolding impact of the COVID-19 pandemic.
“The business is well-positioned to catalyze the ongoing economic recovery as well as benefit from this resurgence,” he added.
The Group also witnessed a 7 percent rise in operating costs on account of an increase in staff costs as the Group enforced cost management initiatives to ring-fence the business from the impact of the ongoing healthcare crisis.
The Group’s loans also recorded growth, growing by 9 to close at Sh606.9 billion.
The bank says its risk fell to 2.2 percent from 4 percent, with the ratio of non-performing loans at 14.3 percent from 13.7 percent in 2020.
Despite the impact of the healthcare crisis, the Group said it is on track to achieve its three-year Beyond Banking Strategy which is anchored on delivering the very best in customer experience and driving a digital future.
This is according to the bank’s chairperson Andrew Kairu who said that while the pandemic is still in the midst, the rollout of a vaccine globally has brought hope that the crisis will soon be under control.
“The resilience and providence of our concerted efforts to reinforce the sustainability of our business have enabled us to support and walk with our customers, staff and other stakeholders,” said Kairu.
“Looking forward, we believe we shall see the operating environment, and consequently our customer businesses continue to recover,” he added.