NIC secures Sh5.6bn EIB loan for small business borrowing
NIC Bank group managing director John Gachora. PHOTO | DIANA NGILA
What you need to know:
NIC is the second bank to secure EIB loan following disbursement of Sh555 million to ABC Bank last week.
The cash will support the lender’s loan book expansion as it ponders shedding the expensive deposits by deepening its presence in retail and SME segment.
NIC was advised by South African rating agency, GCR, in a rating report released in October to stop relying on wholesale deposits which were pushing up its cost of funds.
NIC Bank has secured a Sh5.6 billion (€50 million) loan from European Investment Bank to fund its loan book expansion and lend small- and medium-sized enterprises.
NIC becomes the second lender to receive cash from the European bank following disbursement of Sh555 million to ABC Bank last week underlining the growing supply of cash to fund entrepreneurship in the country.
“We are accelerating our strategy to grow our retail and SME business. The EIB funding will support our push into the fast expanding SME sector,” said NIC Bank group managing director John Gachora.
The mid-tier lender is currently expanding its branch network.
On Monday it opened its 28th branch at Sifa Towers in Nairobi’s Kilimani area with plans to open an additional two units in the first three months of next year.
“We are investing in new full-fledged branches across the country and the region to enable us to reach more customers and strengthen our deposit base so as to underpin growth in our loan books,” said Mr Gachora.
NIC was advised by South African rating agency, GCR, in a rating report released in October to stop relying on wholesale deposits which were pushing up its cost of funds.
The debt will support the lender’s loan book expansion as it ponders shedding the expensive deposits by deepening its presence in retail and SME segment.
“The group’s ratings could be positively impacted by reduced reliance on wholesale depositor funding supported by the SME and retail strategy,” said GCR while rating the bank A+ with a stable outlook.
NIC’s loan book is larger than its deposit base underlining its reliance on funding from international financiers to fund growth.
As at September, the bank’s loan book stood at Sh102.6 billion compared to a deposit base of Sh97.6 billion.
The mid-tier lender had borrowed Sh14.6 billion as at end of September up from Sh8.9 billion a year earlier.
In the last quarter of last year the bank received a Sh2 billion subordinated debt from World Bank’s International Finance Corporation and raised a further Sh5.7 billion from the first tranche of a Sh8 billion bond.
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