Mauritius’ lender, SBM, eyes Nigerian market in expansion drive

SBM Holdings Ltd., Mauritius’s second-largest lender, is planning to venture into the Nigerian market as part of its plans to double its 147 billion rupees of assets in the next three years by entering into more markets in East Africa and West Africa.

According to reports, SBM plans to execute its West African markets venture as from 2020.

“Nigeria will emerge bigger than South Africa in the next 20 to 24 years,” Moses Harding, advisor to the board of directors and group lead executive at SBM, said, adding, “We will create a hub with either Nigeria or Ghana as the hub into West Africa.”

However, SBM is currently focused on more acquisitions in Kenya as it seeks to become one of the country’s top 10 banks within the next three years before expanding into West Africa.

The bank, which obtained a license to begin operating SBM Kenya Ltd. in May, expects to have its systems and staff in place by December, according to Harding, who added that the bank would then expand by establishing brokerage, micro-finance and asset management units as well as other services.

“We can’t move to tier one in an organic way, so I will look at inorganic options,” Harding said in an interview Monday in the capital, Nairobi. “This is the right time to get close to if not the best value,” he said.

On a pro-rata basis, when population is taken into account, Kenya has more banks than South Africa and Nigeria, the continent’s two largest economies, but is currently losing the numbers to consolidation as government-imposed cap on interest rates is squeezing the ability of smaller lenders to offer loans.

There have been seven acquisitions in the industry since 2015, according to Nairobi-based Cytonn Investments Management Ltd., and more purchases are expected after the central bank in March lifted a two-year moratorium on licensing new banks.

Acquisitions of Kenyan banks are being done at cheaper valuations because of declining net interest income and growing non-performing loans, Cytonn said, according to reports.

SBM, which is owned by the Mauritian government, is targeting growing profit by 30 percent this year to at least 3 billion rupees ($89.2 million) as it expands in the region, Chairman Kee Chong Li Kwong Wing said in April.

It’s opened more branches in the Indian Ocean island nation of Madagascar and plans to grow its operations in Seychelles.

The bank’s shares have gained 20 percent so far this year, compared with a 23-percent advance for the benchmark SEMDEX Index.