What Led to Bank Al-Habib’s Quiet Exit From the Kenyan Market?

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Bank Al-Habib Ltd (BAHL), a Karachi-based commercial bank, has officially exited the Kenyan market after operating a representative office in Nairobi for seven years.

The Central Bank of Kenya (CBK) announced on May 15, 2025, that it had cancelled BAHL’s license to operate in the country under Section 43 of the Banking Act. The move concludes the bank’s only physical presence in East Africa.

BAHL opened its Nairobi office in April 2018 as part of an effort to expand its international footprint into East and Central Africa. Kenya was selected for its position as a regional financial hub and a gateway to fast-growing markets.

The representative office was tasked with promoting the bank’s services, supporting trade finance clients, and acting as a liaison between Kenyan businesses and BAHL’s operations in Pakistan, the UAE, Bahrain, Turkey, China, and the UK.

However, the Nairobi office did not engage in traditional banking activities such as accepting deposits or issuing loans. Under Kenyan law, representative offices are limited to marketing, research, and relationship-building.

BAHL focused on trade-related services, targeting clients involved in bilateral commerce between Pakistan and Kenya, particularly in textiles, agriculture, and manufacturing.

The bank had not indicated any intention of pursuing a full banking license in Kenya during its time in the country. Given the complexity of Kenya’s banking regulations and the saturated nature of the local market, BAHL appeared to view the office as a low-risk way to assess long-term potential rather than commit to full-scale entry.

Internal factors at BAHL drove the decision to withdraw. According to people familiar with the matter, the bank initiated a review of its global operations, seeking to streamline its international footprint and focus on core markets.

This rationalization came amid pressure to cut costs and improve returns, particularly after a drop in net interest income in Q1 2025, Rs33.71 billion, down from Rs37.21 billion in the same quarter the previous year.

While Kenya remains a promising market for banking and trade finance, BAHL’s Nairobi office likely offered limited returns relative to the cost of maintaining an international outpost.

CBK confirmed that the bank’s exit was voluntary and that the office had complied with all regulatory requirements, ruling out any regulatory conflict as a factor in the closure.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.