South Africa’s banking giant sets sight on Nigeria for growth

Absa Group Ltd. is looking to expand its presence in Nigeria, adding Africa’s most populous nation to its push to diversify beyond its biggest markets.

South Africa’s third-biggest lender is planning to convert its representative office into a merchant bank in a move designed to diversify its earnings away from the lender’s key markets of South Africa, Kenya and Ghana, which accounted for more than 80% of profit in the six months to June.

“We’ve got a rep office in Nigeria, which we are exploring the possibilities of converting into a merchant banking license,” the bank’s Chief Executive Officer Kenny Fihla said in an interview with Bloomberg TV. Nigeria has become increasingly compelling for institutional lenders after President Bola Tinubu began taking moves to lure investors and accelerate growth. A merchant banking license would allow Absa to take corporate deposits and offer loans, investment banking and project finance. The move would bring Absa into competition with its larger South Africa-based rivals Standard Bank Group Ltd., and FirstRand Ltd, as well as Nigeria’s own Access Holdings Plc, Zenith Bank Plc, and First Bank of Nigeria Ltd.

Meanwhile, in Kenya the bank raised its stake in a local unit to 72%, less than the 85% it had targeted.

“Over the next couple of years, when the time is right, we will try to increase further,” Absa’s Group Executive for Africa regions Charles Russon said in a separate interview. “Ideally, we would like to have as big a position as possible.”