How Absa aims to cut over-reliance on Kenya as it eyes diversification

Absa Headquaters. [Wilberforce Okwiri, Standard]

Absa Group is planning a strategic shift to reduce its heavy reliance on a few key markets, notably Kenya, where it says the group is currently “overly dependent,” Group Chief Executive Kenny Fihla said. 

The Johannesburg-based pan-African lender, which operates in over a dozen countries, including Kenya, earns about two-thirds of its revenue from South Africa and is also heavily exposed to Ghana and Kenya.

Fihla told investors this concentration poses a risk to the group.

"Within African regions, we are overly dependent on Ghana and Kenya and want to increase the contribution from the other countries," Fihla said in a pre-close strategy update, adding that "we have an overconcentration in South Africa, Ghana and Kenya.

He highlighted that issues in any of these concentrated markets, like Ghana's recent sovereign default, directly impact the group.

To mitigate this, Absa will pursue "bolt-on acquisitions" and intensify its focus on markets such as Tanzania, Uganda, and Mozambique.

"We see massive opportunities in Tanzania and Uganda given significant infrastructure investment," Fihla said, signalling a deliberate pivot to broaden its geographic earnings base.

The strategic move comes even as its Kenyan subsidiary, Absa Bank Kenya, shows resilience, having posted a 15 per cent rise in nine-month profit to Sh16.9 billion despite a slight dip in total revenue.

Absa Kenya’s Managing Director Abdi Mohamed said the unit had “navigated the challenges effectively,” through disciplined cost control and a sharp fall in loan impairments. 

The group’s leadership, however, indicated that strong performance in individual markets does not offset the structural risk of overconcentration.

Financially, Absa Group expects headline earnings growth in the low double digits for the financial year (FY25) and a return on equity (RoE) of around 15 per cent. 

For 2026, it forecasts an RoE of about 16 per cent, partly driven by stronger GDP growth in other African regions.

The group’s financial director, Deon Raju, acknowledged the evolving environment in key markets such as Kenya, where monetary policy is shifting.

"We’ve seen [rate reductions] in Kenya, and Ghana is cutting rates. So that will be more of the theme," he said, noting short-term margin pressure.

Fihla outlined four strategic pillars underpinning the diversification push. They include customer-led growth, geographic and business-line diversification, efficiency drives, and the exploration of new opportunities such as digital banking and wealth management. Leadership incentives will be tied to executing this realigned strategy, he added.