Commercial Bank of Africa (CBA) plans to open 16 new branches in Kenya over the next three years, signalling renewed expansion drive for one of Kenya’s more conservative and corporate-oriented lenders.
Group managing director Isaac Awuondo said during the listing of a bond at the Nairobi Securities Exchange that his bank has started the expansion in Kenya and the region as part of its medium term plan running to 2018.
The bank, associated with the wealthy Kenyatta family, opened its most recent branches in Nanyuki and Kampala last year.
“In Kenya we currently have 24 branches. Our target is to reach 40 and we are looking at areas with economic activity across the country. That evaluation is an ongoing process to identify opportunities and customers,” said Mr Awuondo.
“In Tanzania we have 11 branches and we are looking to increase that to at least 15 in the next two to three years. In Uganda where we are very new we have started planning for a second branch in Kampala and then look at the rest of the country.”
CBA, the largest non-listed bank in the country, has seen its retail business grow sharply following introduction of M-Shwari loan and deposit facility in partnership with Safaricom. At the end of December, M-Shwari had nine million customers.
The lender has in the past refrained from the mass market approach adopted by some competitors such as Equity and KCB. Other than the M-Shwari accounts, CBA has a core customer base of about 67,000 in the region.
Mr Awuondo said the strategy for regional expansion would be through acquisition where CBA finds an existing bank fitting its requirement otherwise the lender will set up green field operations.
CBA will fund the branch expansion using the proceeds of its medium term note issue that attracted Sh7 billion, representing a 40 per cent oversubscription on the targeted Sh5 billion. It is set to take up a green-shoe option of Sh2 billion on the bond.
The lender planned to raise Sh8 billion over a two-year period beginning with the Sh5 billion tranche this year and the remainder by the end of June 2015.
The oversubscribed first tranche and the green-shoe option mean the bank now could borrow up to Sh10 billion through bonds.
As the bank widens search for new customers, it has started offering Kenyans in the diaspora electronic bank accounts in Kenya.
Remittances from abroad have grown in recent years, averaging $118 million (Sh10.6 billion) a month in the first nine months of 2014, compared to $53.5 million (Sh4.7 billion) five years ago.
The remittances have become a key battlefront in the financial services sector where transactional commissions, foreign exchange earnings and cheap deposits for banks have become huge revenue earners.
Mr Awuondo announced that CBA would move into insurance and health management by April.