East African banks outpaced South African banks on shareholder returns between 2022 and 2025. Tanzanian banks hit 59% over the period, Kenyan banks reached 36%, and South African banks delivered 24%, the same as the African continental average and slightly above a 23% global benchmark. Boston Consulting Group’s 2026 Future of Finance report frames the gap, and the gap is now drawing nearly R18bn in 2026 deal money from South Africa into a region the country’s lenders used to overlook.
BCG’s report also shows that financial institutions were the top-performing sector globally in 2025, with a trailing 12-month total shareholder return of 30.2%, ahead of information technology at 26.8%, on S&P Capital IQ data. Africa’s banks improved their operating expense-to-asset ratio by 20 basis points over 2020-2025, the second-largest gain globally behind China. South African lenders are responding with a 2026 deal wave that targets Kenya, Uganda, Tanzania and Rwanda all at once. The wave, on BCG’s framing, comes at a time when valuations, capital headroom and investor expectations for African banks have aligned for the first time in more than a decade.
Tanzania, Kenya and South Africa Compared on Returns
The headline number is Tanzania. BCG’s 2026 Future of Finance report, drawing on S&P Capital IQ data, shows Tanzanian banks delivered 59% in total shareholder return over the three years to December 2025, the strongest reading of any African market. Kenya followed at 36%, with South Africa at 24% and the global average at 23%. Morocco is a different story: its banks did not match the East African returns on TSR, but every listed Moroccan banking stock trades above book value, a sign of valuation resilience BCG’s authors describe as a near-developed-market signal.
The depth of the East African lead is visible in pricing. As of December 2025, 99% of Tanzania’s listed bank equity traded above book value, on par with Canada at 99% and the United States at 98%, per BCG. Kenya’s market trades at a wider discount, but the country’s banks have reached scale and digital reach that few African peers can match. Henok Eyob, managing director and partner at BCG in Nairobi, framed the contrast in plain terms. Tanzania’s run, he said in the BCG release, “reflects more than cyclical tailwinds,” and Kenya, having taken financial exclusion from 50% to 10% in two decades, “is showing what a maturing financial system can deliver.”
South Africa’s reading is steadier. Its 24% TSR matches the African continental average and comes with deep capital markets, mature regulation and the strongest domestic franchise on the continent. Tijsbert Creemers-Chaturvedi, managing director and senior partner at BCG in Johannesburg, called the African result a foundation for the next move. BCG’s authors describe South Africa as “a more mature and stable market, with strong valuations and TSR in line with the continental average at 24% and strong valuation support.”
Africa’s wider productivity story is part of the same picture. The continent’s operating expense-to-asset ratio improved by 20 basis points over 2020-2025, the second-largest gain globally behind only China at 29 basis points, according to BCG’s data. That single number captures a generation of cost discipline that explains why returns have held up even as interest margins have come under pressure. The continent’s banks also run on a fintech base that grew around 20% in 2025 across the Middle East and Africa, on BCG and FT Partners data.
- 59% TSR in Tanzania, 2022-2025 (BCG 2026 Future of Finance)
- 36% TSR in Kenya, 2022-2025 (BCG 2026 Future of Finance)
- 24% TSR in South Africa, 2022-2025 (BCG 2026 Future of Finance)
- 99% of Tanzania’s listed bank equity above book value as of December 2025 (BCG 2026 Future of Finance)
- 30.2% trailing 12-month TSR for global financial institutions in 2025 (BCG 2026 Future of Finance)
South African Lenders Are Deploying Record Capital Into the Region
The diagnosis has produced a response, and the response is capital. South African banks have committed nearly R18bn in new East Africa investments in 2026, a single-year total that reflects how seriously the country’s three biggest lenders are taking the regional reweighting. The pattern repeats in each name: bigger balance sheet, more control, faster execution. The deals are part of a wider shift in which South African banks are following capital across borders.
The fight over Kenya is the most visible, but it is not the only one. Tanzania and Uganda are also on the shopping list, with Absa running two banks in Tanzania it plans to consolidate and Standard Bank targeting a top position in all of its East African markets by 2030. Equity, KCB and M-Pesa are still defending the rails the new arrivals are trying to use. BCG’s authors call it the first time in more than a decade that valuations, capital headroom and investor expectations for African banks have aligned for active portfolio reshaping, and the 2026 deals are the first wave.
| Lender | 2026 East Africa move | Deal value | Status |
|---|---|---|---|
| Absa Group | Tender offer to lift stake in Absa Bank Kenya to 85% from 68.5% | R4bn | Announced June 2026 |
| Nedbank Group | Offer to acquire c.66% of NCBA Group | Around R13.9bn | Announced 21 January 2026; close targeted Q3 2026 |
| Standard Bank | Targeting top position in all East African markets by 2030 | n/a | Multi-year capital plan |
The three moves run from a partial tender offer to a takeover to a long-term market-share strategy. They target three different East African markets and run on three different timelines. The common thread is willingness to commit balance sheet to a region where BCG’s data shows the returns are running hotter than at home.
Absa Doubles Down on Kenya
Absa launched a tender offer last month to lift its stake in Absa Bank Kenya from 68.5% to as much as 85%, a deal that Absa values at R4bn and that the company framed as a vote of confidence in Kenya and the broader East African market. The transaction removes the cap that minority shareholders held over the unit and gives Absa clearer control over a franchise that has been a strategic piece of the group’s Africa footprint for years. The deal is one of three South African East Africa moves in 2026, and the smallest of the three by headline value.
The Kenya push sits inside a wider East Africa programme. Absa Uganda bought Standard Chartered Bank Uganda’s wealth and retail banking portfolio last year, an extension that added a branch network and a customer book to a market where Absa was previously a smaller player. In Tanzania, Absa owns two banks and has said it intends to consolidate them, a move that, if executed, would give the group a single national brand in a market where it has had to manage two parallel operations.
Nedbank’s R13.9bn NCBA Deal Wins Backing From Moody’s
Nedbank’s move is the largest of the three. On 21 January 2026, the group announced an offer to acquire c.66% of NCBA Group, one of East Africa’s leading financial services groups, for a total purchase consideration of around R13.9bn, based on the Nedbank issue price of ZAR 250.00 per share. The deal is structured as 20% cash and 80% new Nedbank ordinary shares listed on the JSE, with the remaining 34% of NCBA shares to continue trading publicly on the Nairobi Securities Exchange. Nedbank is targeting a third-quarter 2026 close.
NCBA is the asset that makes the deal worth writing. Headquartered in Nairobi and formed in 2019 from the merger of NIC Group and Commercial Bank of Africa, NCBA serves more than 60 million customers across Kenya, Uganda, Tanzania and Rwanda, with digital banking operations in Ghana and Ivory Coast. The group manages KES 665 billion (around ZAR 84.4bn) in assets, disburses more than KES 1 trillion in digital loans a year and has delivered an average return on equity of approximately 19% since 2021. The footprint covers most of the markets where East Africa’s banking returns are running hottest, and it gives Nedbank an instant regional platform where it had only a representative office.
Moody’s, the rating agency, weighed in early. In a 2 February 2026 note, the agency called the proposed acquisition credit positive, citing the chance to improve earnings diversification and to extend Nedbank’s reach into a region with structurally higher economic and credit growth than its core South African market. The deal is unusually significant for one number in Nedbank’s own books: the group’s South African franchise accounted for 90% of its R1.4-trillion in assets and contributed 79% of its R16.9bn headline earnings in the 2024 financial year. The NCBA deal is the largest single step the group has taken to rebalance that mix, with the 80% scrip component of the consideration structured to limit balance sheet strain and support capital preservation, on Moody’s analysis. Nedbank’s 21 January 2026 press release on the offer is anchored on the same diversification logic.
The acquisition would enhance Nedbank Group’s geographic diversification and longer-term growth prospects by increasing its exposure to East Africa, a region with structurally higher economic and credit growth than Nedbank’s core South African market.
Moody’s, the rating agency, framed the deal in a 2 February 2026 note as credit positive for Nedbank’s earnings diversification, with the strategic logic captured in a single sentence. Standard Bank was also pursuing NCBA before the deal went to Nedbank, and reports from Kenya suggest the Standard Bank-NCBA deal collapsed over branding disagreements, per Business Day’s reporting on the same Moody’s note. The NCBA shareholders’ circular on the Nedbank offer lays out the terms in full.
Standard Bank’s Wider Bet on a Top East African Position
Standard Bank, Africa’s largest lender by assets, did not win the NCBA auction. The group, which already draws more than 40% of its profit outside South Africa, has stated a public target to reach a top position in all of its East African markets by 2030. That makes its 2026 move into Kenya, where it operates through the Stanbic brand, part of a multi-year capital plan rather than a one-off deal. Standard Bank’s African portfolio spans 20 countries outside South Africa, with the recent addition of Egypt, and its lead in the region is anchored in the corporate and investment banking franchise that has built cross-border trade finance and large-ticket lending across the continent for two decades.
The group’s stated ambition is to translate that strength into retail and digital reach, an extension that would put it in direct competition with Equity and KCB, the Kenyan incumbents who already control the largest share of the country’s banking market. Standard Bank has the balance sheet to do it. The question is execution, and the 2030 target is the date the market will use to judge the result.
The Fintech Backbone Powering East Africa’s Lead
Behind the bank-level returns is a payments and digital infrastructure that South Africa does not match at retail scale. BCG’s report cites M-Pesa in Kenya as the platform that has demonstrated how digital financial services can scale rapidly. A wider cast of fintech companies, including Flutterwave, Paystack, Chipper and Wave, is building the payments rails for cross-border commerce across the continent, and the result is a digital stack that South African lenders have spent a decade trying to build at home.
The Middle East and Africa fintech market grew around 20% in 2025, supported by mobile money, digital wallets and the kind of financial inclusion that took Kenya from 50% financial exclusion to 10% in two decades. The scale of the lead is best seen in M-Pesa, which BCG’s report describes as the dominant payments rail in the East African market, with banks competing for the parts of the market M-Pesa does not own. For South African lenders, the practical consequence is that the cost of acquiring retail customers in Kenya is lower than in their home market, but the cost of competing with the platform itself is much higher. The same model, on BCG’s framing, is the digital stack African banks have to build in their other markets, with banks on top of the rail and mobile money underneath.
The deals in 2026 buy scale, but they do not buy the rails. The structural moat around the Kenyan incumbents is the same one BCG’s authors say African banks have to build in their other markets, with a digital stack between the bank and the customer and the bank on top. Henok Eyob of BCG Nairobi put the same point in different terms, with high-quality judgment at scale, he said, the binding constraint in the AI era, and the institutions that build it first the ones to convert performance into structural leadership, on BCG’s framing.
What BCG Says Banks Must Do Next
The 2026 Future of Finance report ends with five imperatives for African lenders, treated as a connected set of moves. The first is to use AI to reset productivity structurally, since most recent profitability gains reflect income uplift combined with cost containment rather than a transformation of the operating model. The lever is a shift in technology spending from run-the-bank to change-the-bank, with AI embedded in day-to-day work and a clear economic owner.
The second is to rebalance capital toward tech-led growth, with growth re-emerging as the more powerful value lever for institutions trading above book. The third is to plot an active M&A portfolio strategy, on the basis that valuations, capital headroom and investor expectations now align in favour of active portfolio reshaping. The fourth is to position early where AI, non-bank financial institutions and digital assets intersect with banking. The fifth is to concentrate CEO-owned AI bets and execute them with discipline, with leading institutions running a portfolio of six to eight high-impact initiatives chosen through a rigorous assessment of value, competitive advantage, reusability and time horizon.
Creemers-Chaturvedi closed the report with the same theme. “We believe it is an imperative for banks to sharpen their focus on a small number of CEO-owned AI bets and execute them with discipline,” he said. The same imperative applies to the 2026 deal wave, with capital already moving and BCG’s authors framing the next step as operating model change.
BCG’s broader call is to rebalance capital toward tech-led growth after a decade of cost discipline, and to plot an active M&A strategy in a market the report describes as open for portfolio reshaping for the first time in more than a decade. The deals in 2026 are the first wave of that work, not the end of it. African banks have to move from strong performance to structural leadership, with AI and digital infrastructure as the levers. The continent’s operating expense-to-asset ratio improvement of 20 basis points over 2020-2025 is the floor the next decade has to build on, on BCG’s data.
- Use AI to reset productivity structurally, shifting technology spending from run-the-bank to change-the-bank and embedding AI in day-to-day work.
- Rebalance capital toward tech-led growth, treating growth as the more powerful value lever for institutions trading above book.
- Plot an active M&A portfolio strategy, increasing scale in core markets and expanding into attractive pockets of value.
- Position early where AI, non-bank financial institutions and digital assets intersect with traditional banking.
- Concentrate CEO-owned AI bets and execute them with discipline, typically a portfolio of six to eight high-impact initiatives.
Frequently Asked Questions
Why are South African banks expanding into East Africa?
Tanzania and Kenya’s 2022-2025 shareholder returns of 59% and 36% outpaced South Africa’s 24% and the 23% global average, according to the BCG 2026 Future of Finance report. South African lenders responded with nearly R18bn in new East Africa investments in 2026, the heaviest year of regional capital deployment by the country’s three biggest banks in a decade.
Which South African banks are most active in East Africa?
Absa is buying up to 85% of Absa Bank Kenya in a R4bn deal and owns two banks in Tanzania it plans to consolidate. Nedbank is acquiring a c.66% stake in NCBA Group for around R13.9bn, a deal Moody’s called credit positive. Standard Bank, which already draws more than 40% of its profit outside South Africa, has set a public target to reach a top position in all East African markets by 2030.
What is NCBA and why is Nedbank buying a stake?
NCBA Group, headquartered in Nairobi, serves more than 60 million customers across Kenya, Uganda, Tanzania, Rwanda and digital banking in Ghana and Ivory Coast. Formed in 2019 from the merger of NIC Group and Commercial Bank of Africa, NCBA manages KES 665 billion in assets and has delivered an average return on equity of approximately 19% since 2021. Nedbank says the deal diversifies earnings, given that its South African franchise accounted for 90% of the group’s R1.4-trillion in assets in 2024.
How do East African banks compare with South African banks on shareholder returns?
Tanzania’s banking sector posted 59% total shareholder return between 2022 and 2025, with 99% of its listed bank equity trading above book value as of December 2025, on par with Canada and the United States. Kenya followed at 36%, while South Africa tracked the African continental average at 24%, according to the BCG 2026 Future of Finance report.
