SA still king, but East Africa is becoming Africa’s banking heartbeat

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While South Africa remains the mainstay of the banking sector in Africa, jurisdictions such as Kenya and Tanzania, located in the fastest-growing East Africa market, are fast catching up, a region in which domestic majors have this year made nearly R18bn in new investments to expand.A study released by multinational consultancy firm Boston Consulting Group (BCG), “Future of Finance”, shows that African lenders delivered a strong 24% total shareholder return (TSR) in 2025, still lagging their larger peers in the eurozone, Japan, South Korea and Canada.The study flags Tanzania’s banking sector, a top performer with total shareholder return of 59% in 2022-25, followed by Kenya with 36% and South Africa at 24%.BCG said this highlights the growing maturity of financial services institutions across the continentTijsbert Creemers-Chaturvedi, MD and senior partner at BCG in Johannesburg, said African banks have earned the right to be bolder on productivity, growth, and innovation.“One of the most important findings in the report is that financial institutions were the top-performing sector globally in 2025 in terms of value creation. African institutions have kept pace with the global average, which signals a strong basis for future growth, even if some developed markets remain ahead.Read: As SA banks shop in East Africa, Moody’s says Absa’s latest move is solid“When we look more closely at performance over the past three years, the leading business models are clear. Digital banks, universal banks with strong corporate and investment banking platforms, and specialised banks have generated the highest returns. This points to a shift toward more focused and scalable models.”The BCG report also notes Morocco as exhibiting a different dimension of strength, with all listed banking equity trading above book value, pointing to strong profitability fundamentals and sustained investor confidence in the market.“South Africa, by contrast, represents a more mature and stable market, with strong valuations and TSR in line with the continental average at 24% and strong valuation support. Compared to faster-growing markets like Tanzania and Kenya, performance has been more stable, underlining the opportunity to unlock further growth through innovation and new business models,” the study notes.“Alongside banking performance, Africa continues to be one of the most dynamic fintech environments globally. Platforms like M‑Pesa in Kenya have demonstrated how digital financial services can scale rapidly and expand financial access, while other companies including Flutterwave, Paystack, Chipper and Wave are building payments infrastructure and enabling cross-border commerce.”Alongside banking performance, Africa continues to be one of the most dynamic fintech environments globally. South African banks have a significant skin in the game in East Africa. Absa last month announced a R4bn deal to hike its exposure in its Kenyan business to 85% from 68.5%. Nedbank, earlier this year, moved to purchase a controlling stake in NCBA — a lender that Standard Bank was also courting — for R13.9bn. Moody’s has endorsed Nedbank’s NCBA deal as credit positive. As part of its push to grow its East Africa portfolio, Absa Uganda last year bought Standard Chartered Bank Uganda’s wealth and retail banking business portfolio.In Tanzania, Absa owns two banks and aims to consolidate them. Standard Bank is targeting a top position in all markets in East Africa by 2030. The group, Africa’s largest bank, already draws more than 40% of its profit outside South Africa, led by its dominant corporate and investment banking franchise.