KCB raises stakes with Sh12.4bn war chest

Cash flush Kenya Commercial Bank has announced plans to double its loans book following the Sh12.4 billion capital injection, setting the stage for a bruising battle for control of the Kenyan banking business.

The bank’s CEO Martin Oduor-Otieno on Thursday shared his thoughts with Business Daily about his Sh35 billion capital machine, the direction of the local banking industry, and future prospects of the bank.

Excerpts:

The rights issue fell short of the Sh15 billion expectation. Are you disappointed?

Absolutely not. If one gets a success rate of 83 per cent in exams, it is reason enough to be happy. Raising Sh12 billion is not a simple matter.

More importantly, KCB had stated expressly that it was targeting Sh7.5 billion and we got Sh5 billion on top.

What next with the Sh12.4 billion capital injection?

The bank is now more confident of taking on its rivals head on and consolidating our business is our number one step. The market should expect a very aggressive KCB as we target to grow to double our loan book and deposits.

How do you expect to double your business in such a competitive market environment?

The high capital levels will give us a number of advantages over most of our rivals.

I can now lend up to Sh7 billion to a single customer, from Sh4 billion. Five years ago I could only lend slightly below Sh1.5 billion.

This tells you that I am targeting huge property and infrastructure projects that are becoming common in the region, which other banks would struggle to fund.

We will increasingly look at the telecoms, energy, and road construction sectors. These industries are cash hungry. Volumes and the scale of loans will influence future profitability in Kenya’s banking sector, and KCB wants part of this change.

So, does this mean that the bank intends to shed its retail banking tag and go big on corporate banking?

Not really. I want to cover the full breadth of the market cross the Eastern Africa region. The bank will give the subsidiaries (Uganda, Tanzania and Rwanda) Sh3 billion from the right issue proceeds to boost their capacity since they have been operating at minimum capital levels.