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