South Sudan President Salva Kiir waves as he greets schoolchildren at Juba International Airport in Juba on September 13, 2018. FILE PHOTO | NMG Analysts at EFG Hermes say that South Sudan operations for KCB, Equity, Co-operative and Stanbic Bank have started to stabilise after several years of making losses.
The civil war, which started in 2013 and ended this year, led to massive write down of assets, loss of revenue and hyperinflation, which resulted in banks reporting monetary losses due reassessment of assets and liabilities.
The four banks, which are listed on the Nairobi Securities Exchange, have operated in South Sudan for an average of 10 years, with their performance characterised by losses, declining profitability, scaling down of operations and closure of branches.
Kenyan top retail banks with operations in South Sudan are optimistic about an economic turnaround after years of mixed performance weighed down by political unrest, hyperinflation, currency devaluation and shortage of foreign currency.
Analysts at EFG Hermes say that South Sudan operations for KCB, Equity, Co-operative and Stanbic Bank have started to stabilise after several years of making losses.
The civil war, which started in 2013 and ended this year, led to massive write down of assets, loss of revenue and hyperinflation, which resulted in banks reporting monetary losses due reassessment of assets and liabilities.
The four banks, which are listed on the Nairobi Securities Exchange, have operated in South Sudan for an average of 10 years, with their performance characterised by losses, declining profitability, scaling down of operations and closure of branches.
The lenders went into South Sudan following a peace deal in 2005, attracted by a large unbanked population and oil wealth. KCB started operations in the country in 2006 and Co-operative Bank was the latest entrant in 2013.
“While the banks still report monetary losses, the magnitude has declined because the hyperinflation rate has declined. However, the profit contribution from South Sudan is much lower than it was at its peak as transaction volumes haven’t recovered,” Ronak Gadhia, EFG Hermes director in-charge of sub-Saharan Banks told The EastAfrican.
Last year, KCB’s subsidiary in South Sudan recorded a net profit of $5.6 million, Equity made $4.7 million, Stanbic $1.65 million, and Cooperative made a loss of $4.19 million, according to the banks’ audited financial statements.
Long game “The Kenyan banks are playing the long game, and are not after quick gains. What is happening in South Sudan is the […]
