Kenya’s KCB Group Limited is set to be the first foreign lender to enter Ethiopia’s banking sector following reforms that opened the industry to international players, according to sources at the National Bank of Ethiopia (NBE), The Reporter writes.

Officials from KCB and NBE are in discussions to finalise compliance requirements. Sources told the publication that they expect the Nairobi-based banking group to begin laying the groundwork for its Ethiopian expansion “in the near future”.

Ethiopia’s amended Banking Business Proclamation, passed by parliament in November 2024, permits foreign banks to enter the market by incorporating subsidiaries, opening local branches or liaison offices, or acquiring equity in domestic banks. The law limits foreign ownership to 40% in any Ethiopian bank.

KCB Group CEO Paul Russo, speaking to 1st Afrika in June, said the country’s “large and financially underserved population” makes it an attractive opportunity despite the ownership cap.

Ethiopia's population of more than 126mn people remains largely underbanked. According to the World Bank’s Global Findex Database (2021), only 35% of Ethiopian adults have access to formal financial services, compared to Kenya’s 83%.

The November 2024 legal reform marked a historic policy shift aimed at modernising Ethiopia's financial sector and attracting foreign capital after years of state dominance. KCB’s anticipated entry signals growing investor confidence and is expected to pave the way for other international lenders.

KCB Group is a publicly listed financial services company headquartered in Nairobi. It operates banking subsidiaries in Rwanda, Uganda, Tanzania, Burundi, and South Sudan. The Group reported more than $1.5bn in revenues and $478mn in net profit in 2024.

As bne IntelliNews reported, KCB Group also reported a net profit of KES 16.09bn ($124.25mn) for the quarter ended March 2025, nearly unchanged from KES 16.06bn ($124.02mn) a year earlier. The flat performance reflected an 8.6% rise in net interest income to KES 33.72bn ($260.39mn), which was offset by a 9.7% decline in non-interest income and a 3.4% increase in operating expens