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KCB to expand to Ethiopia, Mozambique

31 July 2015, 09:21

Nairobi - Kenya Commercial Bank (KCB) said it expects a better performance in the second half 2015 after reporting higher first-half profits, and plans to expand into Ethiopia and Mozambique over the next 18 months.

"We are looking at ... acquiring a bank in Mozambique," CEO Joshua Oigara told Reuters after an investor briefing. KCB was also in talks with commercial lenders in Tanzania over a possible acquisition and would open a representative office in Ethiopia, he said.

Kenya's biggest bank by assets posted a 13 percent rise in first-half pretax profit, from a year earlier, to 13.20 billion shillings ($130 million), driven by growth in fees, commissions and interest income.

Gross fees and commissions jumped 21 percent to 6.84 billion shillings, while net interest income rose 13 percent to 19.45 billion shillings, the bank said. Earnings per share increased to 6.11 shillings from 5.48 shillings.

KCB forecast growth in the second half of the year from loans offered through a mobile phone service in partnership with telecoms company Safaricom, saying it aimed to double its customers to 5 million customers by year-end.

"I see the second half looking stronger than the first half. I think in terms of loans, expansion and assets, we are already ahead of our full-year target," Oigara said.

He said KCB would withstand the effects of higher interest rates after the central bank raised the Kenya Banks Reference Rate (KBRR) - which banks use to price their commercial loans - to 9.87 percent as of July 7 from 8.54 percent previously.

He said 55 percent of KCB's customer loans had variable rates that were affected by the higher KBRR, while the rest were fixed rate and foreign-currency denominated loans.

"The loan pipeline is significant. We have got loan applications ... in excess of $1 billion," he told Reuters.

KCB's shares were down 1.9 percent at 50.50 shillings by 1139 GMT, with analysts citing profit taking and slower first-half earnings growth versus a year ago.

"If you look at the profit growth, it wasn't as aggressive as what people expected ... compared to last year," Agnes Achieng, research analyst at Sterling Investment Bank said.

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- Reuters


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