KCB set to inject Sh3bn more in National Bank


KCB Group CEO Joshua Oigara (right) Chairman Andrew Kairu (centre) and Group CFO Lawrence Kimathi during the release of the full-year result. PHOTO | POOL

KCB Group #ticker:KCB will provide an additional capital injection of Sh3 billion to National Bank of Kenya (NBK) in the coming days, with the cash going to help the subsidiary comply with minimum capital requirements.

NBK has continued to breach statutory capital levels despite receiving the initial capital support of Sh5 billion from KCB in December 2019. The breaches have constrained NBK’s capacity to take more deposits and expand its loan book.

“We will put Sh3 billion [into NBK] before the end of this month,” KCB’s chief financial officer Lawrence Kimathi told Business Daily.

KCB had planned to provide the additional capital last year but delayed. Mr Kimathi said that NBK’s capital levels will be further supplemented by the subsidiary’s own cash flows and recovery of non-performing loans over the next few months.

NBK’s core capital to total risk weighted assets stood at 8.7 percent in the year ended December, 1.8 percentage points below the statutory minimum of 10.5 percent. Total capital to total risk weighted assets was 10.3 percent against the set threshold of 14.5 percent, a gap of 4.2 percentage points.

The lender’s core capital to total deposit ratio stood at 6.2 percent, trailing the minimum requirement of eight percent by 1.8 percentage points. NBK reported a net profit of Sh177.7 million in the year ended December, reversing a net loss of Sh336.9 million a year earlier.

Recapitalisation of NBK and the impending purchase of two banks in Tanzania and Rwanda for Sh4.4 billion from Atlas Mara are what prompted KCB to cut its dividend payout.