Smep Microfinance Bank Limited has grown to join the top tier of Kenya’s micro-banks on the backdrop of the sale of a majority stake in the lender last year.
The Central Bank of Kenya (CBK) now ranks Smep as the third largest micro-finance bank (MFB) in the country behind Faulu and the Kenya Women in the top-tier category. Smep ranks ahead of Rafiki and Caritas in the category.
Smep closed the year to December 2023 with a market share of 8.8 percent compared to a share of 4.6 percent previously.
The growth of the micro-lender mirrors the impact of recent mergers and acquisitions in the business segment, which has also seen the market shares of LOLC (formerly Key MFB), Branch (formerly Century) and Salaam (formerly Uwezo) grow.
LOLC, Branch and Salaam have risen to become medium sized micro-banks with market shares of 1.9, 2.8 and 1.6 percent, respectively in contrast to market shares of 0.6, 0.4 and 0.5 percent respectively in 2020- the year preceding the acquisitions spree.
Hope Advancement Inc., a subsidiary of the Hope International Charity acquired a majority 51 percent stake in Smep last year handing the micro-bank a new lease of life to scale operations in the country.
Smep closed the year with Sh3.89 billion in total assets and a capital base of Sh1.05 billion alongside 47,437 deposit accounts and 20,387 loan accounts.
The micro-bank says the acquisition helped unlock resources and expertise which have served to expand the lender’s reach.
“This acquisition brought several advantages, including Access to Hope International’s expertise and resources which will bolster Smep Microfinance Bank’s capabilities and expand its reach.
"Additionally, the partnership enhances governance by introducing fresh perspectives and diverse backgrounds to the board of directors,” Smep board chairman Nelson Kuria states in the micro-lenders annual report for 2023.
The lender ended 2023 with a net profit of Sh23.7 million from Sh7.5 million previously.
Hope’s acquisition of a majority stake in Smep led to a board reorganisation under which Hope International got five new director seats.
Branch (formerly Century MFB) has on its part leveraged technology to operate as a branchless lender after closing three outlets to become a fully-fledged digital bank.
Brach International, a digital lender, acquired Century MFB in January 2021 by purchasing an 84.89 percent stake in the lender.
The micro-bank allowed Branch to obtain deposits from customers for the first time providing a new funding base for its primary lending operations.
Branch ended 2023 with an asset base of Sh1.05 billion, Sh403 million in total deposits and 43,800 active loan accounts.
Daraja and Choice MFBs meanwhile remain classified as small micro-lenders (market shares of less than one percent) despite the sale of stakes to Umba Inc (66 percent) and Wakanda Network (85 percent) in May 2022 and October 2021, respectively.
Maisha MFB which sold a stake of 55.8 percent to Cactus Cantina in May 2023 meanwhile dropped from a medium to small micro-lender with a market share of 0.4 percent.
Cumulatively, the micro-lending industry ended 2023 with an asset base of Sh64.2 billion and 262,154 loan accounts.
CBK has encouraged mergers and acquisitions in the industry to support its stability.
