South Africa’s third-largest lender, Absa Group Ltd., has announced plans to convert its existing representative office in Nigeria into a fully licensed merchant bank.
The move is designed to expand the bank’s corporate banking presence in Africa’s most populous country and diversify earnings away from its primary concentration hubs.
Speaking in an interview with Bloomberg TV following the release of the bank’s H1 2026 financial results, Absa Chief Executive Officer Kenny Fihla highlighted that the Group currently relies on South Africa, Kenya, and Ghana for over 80% of its total net income.
A merchant banking license from the Central Bank of Nigeria (CBN) would enable Absa to mobilize corporate deposits, deliver project finance, underwrite debt and equity capital market transactions, and offer trade finance to institutional clients without opening a broad retail branch network.
Strategic Rationale & Market Dynamics
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Mitigating Geographic Concentration Risk: “The dependence on two or three big markets is fine if you’ve got tailwinds, but as soon as you experience some headwinds, you are vulnerable to massive shocks,” CEO Kenny Fihla stated. Diversifying into Nigeria and reopening a representative office in Angola form the cornerstone of Absa’s growth strategy to protect against regional economic shocks.
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Capitalizing on Policy Reforms: Institutional lenders have found the Nigerian market increasingly attractive following foreign exchange liberalization, fuel subsidy removals, and market-oriented reforms introduced under President Bola Tinubu’s administration.
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Institutional Competition: Obtaining a merchant banking license will place Absa in direct competition with its South African peers—Standard Bank Group (operating via Stanbic IBTC) and FirstRand Ltd. (operating via RMB Nigeria)—as well as Nigerian Tier-1 institutions including Access Holdings, Zenith Bank, First HoldCo, and UBA.
H1 2026 Financial Context
The expansion initiative comes on the back of resilient operational performance. Absa Group posted a 12% increase in H1 2026 net income to 12.58 billion South African rand (up from 11.23 billion rand in H1 2025).
In tandem with its Nigerian plans, Absa is strengthening its position in East Africa by increasing its equity stake in Absa Bank Kenya PLC to 72% via a local tender offer, reinforcing its broader strategy to capture cross-border trade flows between West, East, and Southern Africa.
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