• KCB Group plans to acquire a stake in an Ethiopian bank as part of its expansion strategy.
• The investment depends on regulatory approval in Ethiopia’s evolving banking framework.
• The Kenyan lender intends to fund the move partly with proceeds from the sale of National Bank of Kenya.

Kenya’s KCB Group is preparing to enter the Ethiopian banking market before the end of 2026 through the acquisition of a stake in a local bank.

In an interview published on March 13, the group’s chief financial officer, Lawrence Kimathi, said KCB had already identified an Ethiopian bank that fits its strategy for entering the market and plans to acquire a shareholding in the institution. The specific terms of the transaction are expected to be clarified in the coming months.

The planned acquisition remains subject to Ethiopia’s banking regulations, which generally limit foreign ownership in local banks to 49%. However, Kimathi noted that the legal framework allows for exceptions if regulators determine that foreign investment could support the development of the country’s banking sector. In such cases, the National Bank of Ethiopia may open discussions with the investor regarding the possibility of a majority stake.

Formal discussions between KCB Group and the Ethiopian central bank began in June 2025. At the time, the monetary authority said the Kenyan group had expressed interest in entering the local banking market. The talks focused on the conditions under which the group could operate within Ethiopia’s banking system.

The project reflects broader reforms underway in Ethiopia’s financial sector. In 2022, the government led by Prime Minister Abiy Ahmed announced plans to gradually open the banking industry to foreign investors. In March 2023, a committee was established to prepare the liberalization process by reviewing financial regulations and developing rules allowing international banks to invest in the country.

KCB Group plans to finance its expansion into Ethiopia partly with proceeds from the sale of National Bank of Kenya.

The lender’s financial results support its expansion ambitions. For the 2025 financial year, KCB reported a pre-tax profit of 90.9 billion Kenyan shillings ($703.3 million), up from 82 billion the previous year, an increase of 11%. The growth was mainly driven by higher net interest income, which rose to 148 billion shillings from 137.3 billion in 2024.

If the discussions lead to a deal, the move would mark a new step in the Kenyan group’s regional expansion strategy and strengthen its position within East Africa’s banking sector.

Chamberline Moko