| NAIROBI, March 22
NAIROBI, March 22 Kenya's Diamond Trust Bank
(DTB) will focus on integrating Habib Bank Kenya and
will only start looking to make further acquisitions from next
year onwards, its chief executive told Reuters on Wednesday.
DTB said on Tuesday it would buy Habib Kenya, which has six
branches in the country, with DTB shares worth 1.8 billion
shillings ($17.5 million). The deal is expected to be concluded
in July, subject to shareholder and regulatory approvals.
Nasim Devji said the deal will give DTB access to some of
the most promising frontier markets in Asia, through Habib
Kenya's correspondent banking relations with Habib
International's network. Pakistan-based Habib Bank Limited
, the parent of Habib Kenya, operates in 22 countries
The acquisition is the latest in a period of consolidation
sparked by the closure of three banks since 2015, a government
cap on interest rates last September and a surge in bad debts.
"We need this year to ensure we are well assimilated, the
two banks come together seamlessly ... Then maybe 2018, 2019 we
will look at other options," Devji said.
Francis Mwangi, a bank analyst at Nairobi-based Standard
Investment Bank, said the rate cap was forcing smaller banks to
look for, or accept suitors in order to survive.
"Those banks come under pressure in terms of operations."
DTB, which also has outlets in Uganda and Tanzania, is
expected to increase its market share through the deal.
Analysts said DTB's shares were trading at a discount of 30
percent to the rest of the industry.
DTB said on Tuesday its pretax profit rose 14.8 percent to
10.99 billion shillings, surprising analysts who were expecting
the rate cap, which also set a minimum deposit interest rate, to
hurt its earnings.
"From the numbers we have seen so far, that has not been the
case. To us it is an opportunity to start looking at the tier 2
banks," said Mwangi of Standard Investment Bank.
($1 = 102.8400 Kenyan shillings)
(Editing by Alexander Smith)