Barclays targets small businesses to catch up with rivals
13 August 2015, 18:03
Nairobi - Barclays Bank of Kenya
has earmarked 30 billion shillings ($295 million) for lending to
small and mid-sized business as it seeks to catch up with profit
growth at rivals.
Foreign funds have been investing in Kenyan lenders in
recent years, attracted by growing trade flows and the rise of
mobile-phone banking which is helping to win new customers.
But results from Barclays Kenya, a unit of Barclays Plc
, showed on Thursday it is lagging local rivals, with
pretax profits up 5 percent in the first half of the year.
Equity Bank and KCB Group, Kenya's
biggest lenders by depositors and assets respectively, recorded
double-digit profit growth for the period, helped by their
strength in the small and medium-sized enterprise (SME) sector.
Jeremy Awori, chief executive of Barclays Kenya, said it had
created a dedicated SME business unit to step up the challenge
in a sector that makes the largest contribution to economic
activity in Kenya.
"We've laid down the gauntlet and we're committed now to
SME," he told Reuters after an investor briefing.
Bank executives say the fast-growing SME market offers
higher returns than lending to larger corporates, in part
because it is perceived as more risky.
Barclays Kenya has relaxed lending requirements, such as a
copy of audited accounts, for SMEs seeking to borrow less than
15 million shillings, it said.
The lender, which enjoyed a huge market share a decade ago
before it was challenged by home-grown lenders, made a
first-half pretax profit of 6.43 billion shillings as revenue
grew 6 percent.
Analysts said the lender was paying a price for being too
conservative in its lending practices.
"The first half loan growth was very anaemic and far behind
its peer group. It speaks to a very defensive game. Diamond
Trust Bank has now overtaken Barclays in terms of loan book
size," said Aly Khan Satchu, an independent trader and analyst.
Diamond Trust, which also has operations in Uganda,
Tanzania and Burundi, grew its first-half pretax profit by 14
percent after its net interest income grew by a similar margin.
In contrast, Barclays Kenya's net interest income grew 4
percent, though its non-interest income rose 12 percent, buoyed
by new products such as insurance.
Shares in Barclays Kenya edged down 1 percent to trade at
Kenya is Barclays Plc's second largest market in Africa,
behind South Africa.
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