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Kenya's KCB sees regional markets boosting 2015 earnings

29 October 2015, 21:33

Nairobi - Kenya's biggest lender, KCB Group, expects its international businesses to lift earnings this year, picking up the slack from lower demand for loans in Kenya, its chief executive said on Thursday.

Apart from Kenya, KCB, which has assets of 607.3 billion shillings ($5.96 billion), operates in Uganda, Tanzania, Rwanda, South Sudan and Burundi.

Joshua Oigara said those businesses would help KCB achieve its full-year targets, in spite of a jump in Kenyan lending rates which softened demand for loans from September.

"We have seen very strong performance in our international business. By the end of the year they will have grown 100 percent," he told Reuters in an interview.

KCB posted a 10 percent jump in pretax profit for the first nine months, to 19.4 billion shillings, as the contribution from its foreign operations surged 74 percent to account for 12 percent of the total.

Also read: Kenya seeks review of IMF standby loan facility

Oigara said he expected their contribution to grow to 15 percent by the end of this year, driven by its business in Tanzania and Rwanda. In South Sudan, the group's trade finance and fees and commissions businesses held up despite two years of conflict, boosting earnings, he said.

KCB, which also said it had opened a representative office in Ethiopia, plans to start operating in Mozambique, Somalia and the Democratic Republic of Congo (DRC) in the next five years.

In Kenya, the bank posted a 30 percent growth in loans during the first nine months, partly helped by a new mobile phone-based service, KCB M-Pesa, launched jointly with telecoms operator Safaricom in March.

The service has 4.3 million customers who took 1.8 million small loans worth 4 billion shillings using their phones. Oigara said the loans on that platform would grow to 10 billion shillings by the end of the year.

Higher lending rates after the central bank embarked on a tightening cycle in June were the main worry for the Kenyan business, the chief executive said.

"What we are very concerned about is the increase in the cost of funding," he said, adding banks were yet to see the impact as they only raised their lending rates from last month.

"We haven't seen any weaknesses yet in terms of the quality of the loan book... Now this quarter is when we are likely to see the full impact of the increase in the interest rates."


- Reuters


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