Kenya’s Equity Bank targets 100 Million Customers in 10 years

VENTURES AFRICA – Kenya’s largest lender, the Equity Bank, says it wants to increase its customer base by a ten fold within a decade. Chief Executive James Mwangi said on Wednesday that the bank will seek to raise the number of customers from 10 million to 100 million within the next ten years. To achieve this, Mwangi said the bank would enter ten more African countries within that period, in addition to the five it already serves, by building operations from scratch or acquiring existing lenders, its chief executive said on Wednesday.

Last month the Equity Bank, Kenya’s largest by number of customers, announced its expansion plans will cost Sh200 billion ($2.2 billion). It said it has entered into loan deals for Sh36 billion ($400 million), created additional shares worth Sh20 billion and will raise the rest of the funds through a rights issue or an IPO. The countries targeted for expansion are: the Democratic Republic of Congo, Burundi, Zambia, Zimbabwe, Malawi, Mozambique, Botswana, Ghana, Nigeria and Ethiopia, which is currently off limits to any foreign bank.

However, James Mwangi, who had extended his contract by 10 years in April to steer the expansion, said that only Nigeria may require a cash injection, while others would be funded from operations. Under Mwangi’s his first 10-year term as CEO, the bank moved from a specialist in small loans with 600,000 customers in Kenya into a full-scale commercial bank with 10 million customers, with branches in Uganda, Tanzania, Rwanda and South Sudan.Last year, the bank recorded a 5.5 percent return on assets and 31 percent return on equity. Confident of its continued strong performance, the bank has also committed to preserving its dividend policy of paying out 40 percent of available profit after tax even during the expansion.

Mwangi said Equity Bank is also testing its mobile phone-based banking service, Equitel, which it plans to formally launch in July. The bank has 768,000 active SIM card users after launching its network in partnership with telecoms operator Airtel Kenya. With sights on rivalling market heavyweight, Safaricom’s M-Pesa, the bank says Equitel will aid users transfer money, access credit and make payments by phone. It also offers typical mobile services of calls, text messages and Internet browsing. According to Reuters, Equity leases Airtel’s telecoms infrastructure network, so it keeps all the revenue.