Bank of Africa grows income 106 p.c.

Bank of Africa (BOA) has posted a 106 per cent increase in profits before tax, a performance it attributed to its increased branch network, entry into the Small and Medium-sized (SME) business market and aggressive marketing of products.

“We vigorously went after business in the SME market. As you recall the bank was purely corporate. When we took over we were represented in Mombasa and had few customers. We now have 13 branches and our target is to open a couple more before the end of the year” said managing director Kwame Ahadzi.

He said the bank that continued a quarterly double digit growth pre-tax profit was betting on an aggressive marketing campaign to grow revenues.

As a result the bank’s deposits rose 74 per cent from Sh9 billion a year ago to Sh16 billion.

The bank’s loan book also rose 62 per cent from Sh6.9 billion to Sh11 billion while its net interest income increased 46 per cent to Sh352 million, up from Sh241 million last year.

“Currently our loan portfolio stands at about 15 per cent SME and 75 per cent corporate; the rest is retail but our strategy is very clear in that we want to get to 25 per cent SME in the next three years,” said Mr Ahadzi.

Mr Ahadzi said the banks Chama Account which is a product aimed at small investment groups, and its Visa card have seen strong uptake in the local market.

The lender has also been holding business training clinics for SME owners.

“We held one in Mombasa and we are planning another one. This helps us get close to our clients and this is what has been distinguishing us from our competitors,” said Mr Ahadzi.

He said that the bank saw its other income increase to Sh174 million from Sh91.8 million on account of attractive interest rates and trade volumes in a market that recorded improved performance on account of a recovering economy.

Mr Ahadzi said that the bank welcomed the Central Bank of Kenya’s move to keep interest rates low.

“If interest rates are low, everyone who wants a loan will be able to get one and volumes will increase keeping our profitability high. This means more lending for us and our fee income will increase,” he said.

Bank of Africa plans to introduce mobile banking and has an already existing platform and is already in talks with telecom operators.

Going forward, the bank sees improved performance on a better investment climate following the enactment of the new constitution.

Mr Ahadzi said that credit reference bureaus will help reduce the costs of lending to customers.