One of the major acquisitions in the financial sector in Kenya last year was Mayfair Bank’s takeover by Egypt’s Commercial International Bank (CIB).
CIB first entered Kenya in April 2020 with the acquisition of a 51 percent stake in Mayfair.
But its regional entry strategy got its biggest boost in 2013 when the Central Bank of Kenya (CBK) cleared it to acquire the remaining 49 percent of Mayfair to become its fully owned subsidiary, for a total transaction value of $40 million (Sh6.1 billion).
CIB Kenya says it plans to target the growing middle class, despite having an increasingly lean payslip due to the increased statutory deductions, by leveraging on its advantage which is trade with Egypt.
“So, the latest thing we found is that the small and medium-sized companies, which we have about 60,000 of them in the bank, only about 1,000 are borrowing. The other 59,000 are relying on cashflow to fund themselves,” Hussein Abaza, group chief executive officer for CIB told Business Daily in Cairo, Egypt.
The bank says this has driven it to come up with a special product where small firms could deposit money until 7pm and it’s credited the same day.
“This is very important because we give them interests on a daily basis. So, if say you bank at 6:57pm, it is banked and you get credit and get interest on it.” Mr Abaza said.
Currently, the lender has six branches in Kenya and 200 in Egypt. However, one of the biggest challenges the bank is facing in Kenya is liquidity, admitting to slower deposits from the target market. Both Kenya and Egypt have been in forex crosshairs.
“In Egypt, generally in the banking industry not just CIB Bank, there’s massive liquidity in the local market, especially in the local currency. In Kenya this is one of the biggest challenges especially with the local currency liquidity. So, in terms of income, you really can’t control it but you can control costs of operation,” said Abaza.
“A good trader doesn’t sell expensively, he acquires cheaply. So, get the funds cheaply and that’s what we are trying to do,” Abaza explained.
After five years of consecutive losses at Mayfair, Mayfair CIB reported a strong turnaround last year. This is after operating income increased 64 percent to record Sh891.45 million ($ 8.2 million) in 2021, up from Sh544.95 million ($5.1 million) in 2020 and profits after tax came in at Sh96.1 million ($880.8) compared to a net loss of Sh379.3 million ($ 3.6 million) in 2020.
CIB Group posted a $233 million profit after tax, which is an 83 percent jump in quarter 4, 2023. The bank is cross-listed on the Egypt Stock Exchange, the London Stock Exchange with a balance sheet of over $ 25 billion.
CIB hopes to use Kenya as the first stop of many inroads into East Africa and the larger sub-Saharan region, expanding in African markets since 2019, by establishing a commercial representative office in Addis Ababa, Ethiopia.
By BRIAN GEORGE