Kenya's Equity Bank eyes Barclays Africa's business

Kenya’s biggest bank, Equity Bank, has declared interest in buying parts of Barclays Africa’s operations.

Chief Executive Officer of the bank, James Mwangi told Reuters on Tuesday he saw potential acquisition opportunities following Barclays’ decision to reduce its stake in its African operations.

Barclays has operations in some African countries and taking up its ‘spoils’ will afford the Kenyan bank the platform it needs to expand.

“It is true that they have a very good franchise in Botswana,” the Equity Bank CEO said but was quick to add that Barclays has “a very good franchise in Kenya and Ghana, fair franchise in Uganda and Tanzania. Those are markets that we have ambition to be in or where we have presence and since we want to increase our market share in those countries this provides us a huge opportunity.”

Apart from Kenya, Equity Bank operates in Uganda, Tanzania, South Sudan, Rwanda and the Democratic Republic of Congo.

Mwangi said his bank expected higher returns on assets and equity this year, which will be mainly driven by profit from regional markets.

The CEO said he is expecting a return on assets of 5 percent and a return on equity of 30 percent by the end of this year.

The bank has maintained a return on assets rate of 4.5 percent and a return on equity rate of about 25 percent in the past five years.

“The turbulence and turmoil in currency exchange rates seems to be over. We are headed almost to a stable macroeconomic environment where inflation has started coming down, where exchange rates have stabilized and can most likely only come down,” Mwangi said.

Weaker currencies in Uganda, Tanzania and Kenya last year drove up prices and led to foreign exchange losses. But the Equity Bank boss said a steadier environment this year would boost earnings.

The expansion of the bank’s mobile phone banking operation, Equitel with 1.7 million users since its launch in 2015 allowed Equity to reduce staff costs by 4 percent last year.

“We just launched Equitel on 24th of August so we are moving from 0 to 1.7 million customers in a period of six months. So by the end of this year, we believe we will be rubbing around three million customers,” he said.

With the system, clients can use mobile for services such as making payments or submitting loan applications.