Family Bank gets nod to issue Sh10bn bond in expansion plans
Family Bank Banking hall. The bank Wednesday launched its Sh10 billion bond offer to support its fast growing loan book. PHOTO | FILE
What you need to know:
Family Bank targets to issue the first tranche of the bond at the end of this month to support a fast-growing loan book.
Family Bank has received approval to issue a Sh10 billion bond as it seeks to fund its expansion plan.
The mid-sized lender targets to issue the first tranche of the bond at the end of this month to support a fast-growing loan book.
“The bank’s growth momentum and strategic plans needed to be sustained hence the need to raise additional capital. The programme has been structured in such a way that the bank can continuously raise funding for the next five years for its strategic initiatives up to the Sh10 billion aggregate limit,” said chief executive Peter Munyiri.
Family Bank’s total capital to total risk-weighted assets ratio stood at 16.3 per cent as at end of June, marginally above the statutory minimum of 14.5 per cent.
The subordinated debt will contribute to the bank’s total capital which currently stands at Sh10.4 billion.
The lender’s loan book grew by 24 per cent in the first six months of the year to Sh46.3 billion from Sh37.9 billion in December forcing the bank to look for new capital.
Last year, Family Bank raised Sh3 billion from its shareholders through a rights issue to boost its core capital.
The bank, voted the fastest growing bank in the country, posted a 32 per cent growth in profit for the six months to June riding on the loan book expansion to Sh1.14 billion. The lender did not disclose details of the bond issue.
Family Bank joins other lenders such as Imperial and Chase Bank who have issued bonds this year to support their capital needs.
Imperial Bank, which issued its bond earlier this month, offered a fixed coupon rate of 15 per cent, higher than the return of 13.1 per cent offered by Chase Bank which issued its bond in June.
Interest rates have been rising following Central Bank of Kenya’s efforts to support a weakening shilling by tightening the monetary policy.
Imperial Bank is yet to release the results of its Sh2 billion debt issue but analysts had termed its returns attractive.
Chase Bank’s first tranche was oversubscribed with investors offering the lender Sh4.8 billion against a target of Sh3 billion.
South African microfinance lender, Real People also issued a bond last month which brought in a total of Sh1.63 billion against Sh2.5 billion target, which the company said was partly due to the issue coming when the market was under tight liquidity.
The microlender was offering a return of 13.65 per cent to investors.
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