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10th January 2018
 2. SBM Holdings shares rise on news of its Kenyan expansion

SBM Holdings Ltd (SBMH), the second largest domestic bank in Mauritius, announced in a communique that the Central Bank of Kenya (CBK) has given approved its acquisition of carved out assets and liabilities of Chase Bank (Kenya) Ltd. CBK justified the move as to the value addition for the Kenyan banking sector through increased expertise.

We view positively this development for SBMH as it expands in reach in the vibrant East African region through a potential asset base over  over USD 1bn and an initial clientele base in Kenya. Further to our interactions with SBMH’s management and Chairman at investors meetings, we understand that the carving out of book of business of Chase Bank Kenya represent a low-cost and low-risk route to penetrating this market. Opportunities include the leveraging of SBMH’s low cost of capital relative it its Kenyan peers and high liquidity on the domestic market.


Retrospectively, SBMH acquired Fidelity Bank nearing assets of USD 2 bn in 2016. We estimate SBM total assets to near the USD 7 bn and this would improve the bank’s positioning and visibility to capture pan-African business.

Further to this announcement, SBM shares prices went up by 2%. It is noteworthy that SBM has an attractive dividend yield of 5.1%. We maintain our buy recommendation on the stock, as we consider improvement in its core banking operations in Mauritius and increased income from Mauritius Telecom and SICOM and we also view positively SBM strategy into Africa over the medium term.

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