CFC Stanbic targets retail market with new branches

CFC Stanbic is banking on a new branch in Kariobangi, Nairobi, to increase its share of the retail market and shake up its sluggish loan book.

It will open the 17th branch next month with its eyes on mobilising deposits and tapping lending opportunities among small traders in the low income residential and industrial estate in Northeastern Nairobi.

By going to Kariobangi, the bank will not only be following in the footstep of retail driven banks such as KCB, Equity, and Co-operative Bank but it will be shedding its corporate tag that is emerging as the weakest point in its pursuit of growth.

Contrary to Kenyan banks that have reported good results for the first half on the back of economic recovery, CfC Stanbic’s lending income dropped on marginal increase of its loan book.

Its loan book grew marginally from Sh44. 9 billion in December to Sh48.4 billion in June signalling that the bank is not lending as fast as it’s making loan recoveries relative to other banks.

Ranked the sixth largest bank in the country by assets, CFC Bank attributed the sluggish growth of the loan book to its small customer base, mostly made of corporate clients who accounts for 70 per cent of its issued loans, and low distribution channels.

Increased lending

The bank’s 18 branches pale in comparison to Equity’s 155.

The bank is looking at growing its retail business to take 50 per cent of its loan book by opening three more branches targeted at retail clients.

“We have been slow to capture the retail market. But this will change as we get the benefits of our new IT system installed in May,” said a senior official of the bank who requested anonymity.

The bank changed its banking system to attack the retail banking business—that is emerging as a growth driver in Kenya’s banking system.

In 2008, Stanbic Africa Holding Limited, the parent company of Stanbic Kenya, acquired a 60 per cent stake in CFC Group—but the transaction did not give it a foothold in the retail market.

Ranked the sixth largest bank in the country by assets, CFC has trailed its peers such as KCB and Equity which have announced double digit growth in their lending income the first half helped by growth in their loan books and interest income.

The surge in profitability has been brought home by increased lending, mostly to households, by commercial banks after a contraction in net lending in 2008 and first half of 2009.

CFC’s income from loans dropped to Sh2.42 billion in the six months to June, compared to Sh2.48 billion in the same period last year.