More South African banking giants are turning to Kenya for the next phase of their expansion, betting that the East African nation offers the most attractive gateway into the region's fast-growing but still underbanked markets, according to Bloomberg.
Lenders including Standard Bank, FirstRand and Absa are increasingly targeting Kenya as growth opportunities in their domestic market remain constrained. The renewed interest comes just weeks after Nedbank Group surprised investors with plans to acquire Kenya's NCBA Group, signaling a shift in regional expansion strategies. South Africa's largest bank.
At the heart of the move are new minimum capital requirements in Kenya, which are forcing smaller lenders to seek strategic partners or consolidate, creating a rare window for acquisitions.
This opportunity is attracting keen interest from across the continent, particularly from South African lenders who are looking to higher growth markets as profitability in their domestic economy has slowed.
The push into East Africa's largest economy also coincides with a widespread withdrawal by global banks from Africa. International lenders such as Standard Chartered, BNP Paribas and Societe Generale have scaled back operations across the continent in recent years, opening up space for regional players to expand.
Nedbank's proposed acquisition of NCBA underlines this shift, demonstrating how African lenders are stepping in to fill the gap left by the exit of global institutions.
Beyond South Africa, Other Pan-African Banks They are also targeting Kenya.
Nigerian banks also target Kenya
In January, Nigeria's Zenith Bank received regulatory approval to enter the market through the acquisition of Paramount Bank. The deal joins a growing list of expansions by regional players.
L of Access Holdings, NigeriaLargest banking group by assetshas been steadily building its Kenyan presence. It acquired Transnational Bank in 2020 and completed the purchase of National Bank of Kenya (NBK) from KCB Group in 2025.
Meanwhile, Dubai-based Soren Investment Co. acquired Gulf African Bank, Kenya's largest Islamic lender, further underscoring the country's appeal to foreign investors.
These developments reflect a broader recalibration of banking strategies across Africa. While Ethiopia's recent liberalization has attracted attention, Kenya remains the continent's standout market – offering scale, regulatory depth, fintech sophistication and regional reach unmatched in East Africa.
A recent report from Moody's said that many Western banks that once saw Africa as “the next frontier” have been disappointed by the returns. “Profitability often falls short of expectations when adjusted for currency movements and capital weights,” the ratings agency said.
Weak profitability, tighter regulation and increasing competition from fintech firms have accelerated the withdrawal of global lenders, reshaping Africa's $17.7 billion banking industry and creating space for local and regional players.
Fitch, another ratings agency, warned that the withdrawal of international banks could disrupt cross-border trade and remittance flows in the short term.
“In markets where foreign exchange liquidity is tight, access to hard currencies may be more difficult without FX lines provided by core banks,” a report said. “However, these challenges are likely to be temporary, as African banks generally maintain strong access to financing from development finance institutions.”
According to McKinsey & Company, profitability in Africa's top five banking markets – Egypt, Kenya, Morocco, Nigeria and South Africa – is set to decline by about 2 percent between 2016 and 2022, prompting global banks to reevaluate their presence.
Local banks are getting stronger
South Africa's Absa Group, which has been completely spun off from Barclays, has strengthened its performance, reporting a 17 percent rise in first-half profit in 2025. Morocco's Banque Centrale Populaire and Attijariwafa Bank are also expanding aggressively in Francophone West Africa.
In particular, the exit of French lenders has opened up opportunities for fast-growing regional players such as Vista Group and Coris Bank International, which are acquiring divested subsidiaries across the continent.
Vista now operates in 16 African countries, while Koris is expanding into markets such as Chad and Mauritania.
“French-owned subsidiaries were often constrained by conservative risk appetite and strict provisioning policies,” Fitch said. “With their exit, credit growth is expected to accelerate, especially in low-risk sectors.”
Despite short-term disruptions, analysts say the long-term outlook increasingly favors African-owned financial institutions.
According to African Business, local banks' revenues are expected to grow by an estimated 12 percent in 2025 as they take on customers previously served by global lenders.
With the African Continental Free Trade Area (AfCFTA) expected to reach $450 billion in intra-African trade by 2035, banks are well positioned to finance a new wave of regional commerce.
Digital innovation and regional payment systems are helping lenders overcome foreign exchange barriers by enabling transactions in local currencies – a potential game-changer for cross-border trade.
“We see significant opportunities for local and regional banks in Africa, despite challenges,” Fitch analysts said. “Pan-African banking groups are increasingly well-positioned to compete with long-established global institutions.”
