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Barclays Posts Flat Quarterly Profit Following Re-branding Costs

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Barclays Bank Kenya has posted Sh1.9 billion in earnings for the first quarter ended March 2019 following rebranding costs to ABSA.

Had it not incurred the expense which totaled Sh234.4 million, the bank’s net profit for the period would have risen to about 10 percent; more than Sh2 billion.

Investments in new banking systems and transitional service agreement costs for the provision of several services under the impending separation make up the additional costs.

The lender has disclosed that as part of its separation from Barclays Plc, based in London, it plans to spend billions of shillings for the rebranding of its branches and stationery while also refitting IT systems. This expenditure will affect its earnings for two more years.

“In 2019, the bank’s separation program will involve immense investments and implementation of over 70 technology-specific projects, which will further eliminate service dependency on Barclays Plc and move the bank to superior efficient, robust and customer-centered systems. I am happy to report that all technology changes achieved so far have been implemented with minimal impacts on our customer,” said Barclays Kenya Managing Director Jeremy Awori.

“The separation from Barclays Plc will have an impact on Barclays Kenya’s financial results over the next two years”.

Despite having separation costs eat into its year to date earnings, Barclays’ saw its other performance indicators remain on course for growth. This was shown largely by the increase in both interest and non-interest funded income.

The bank’s total interest income stood at Sh7.4 billion; reflecting a 7.1 percent growth. This is as investment in government bonds and T-bills rose 24 percent to Sh83.1 billion. On the other hand, non-interest income which includes commissions and fees increased by 14 percent to Sh2.5 billion.

Barclays’ interest expenses jumped 38.8 percent to Sh2 billion which is a partial reflection of a 15.8 increase in customer deposits which stood at Sh15.4 billion.

In addition, the bank’s operating costs dropped marginally to Sh4.9 billion, which was a boost to its bottom-line. Loan loss provision was increased by 10.6 percent to Sh636.6 million while gross defaults grew 22 percent to Sh15.4 billion.

ABSA, Barclays’ parent company, will be expected to help absorb part of the separation expenses through either the provision of capital or forfeiture of part of its dividend entitlement.

This arrangement is designed to assist the lender to maintain dividend payouts to minority shareholders over the transition period.

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Banks

Stanbic Bank Half Years Profit Grows to Sh 4.1B

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Stanbic Bank has reported a 14 percent jump in profit after tax in Half Year results for the year ending June 30, 2019, majorly driven by loans and deposits.

The increase in profit has been attributed to increased lending to customers and efficiency.

During the same period, the bank’s loan portfolio grew by 19% to Sh161.9 billion from Sh136.5 recorded in the period ending June 30, 2018.

Subsequently, the firm’s customer deposits were up by 20 per cent closing at Sh201.6 billion from Sh167.3 billion in last year’s performance.

“The results are a reflection of the unstinting support we continue to get from our clients and partners, despite operating in what remains to be a challenging business environment,” said the company CEO Mr. Charles Mudiwa.

The bank attributes its growth to its change in the regulatory environment which affected both the insurance segment and banking.

“We have managed to navigate the complex operating environment by abiding to our strategy which remains pegged on income diversity and resilience,” adds Mr. Mudiwa.

Abraham Ongenge, the bank’s Chief Financial Officer notes that the bank has learnt how to deal with bad loans which have improved their shares.

“We are now more informed and are seeing efficiencies in credit scoring through new data on client behaviour,” he said.

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Banks

Gerald Warui Appointed As Equity Bank’s New Managing Director

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Equity Bank Kenya has appointed Gerald Warui as its fourth Managing Director pending approval by the Central Bank of Kenya. Warui is set to replace the outgoing Polycarp Igathe.

In a statement to the media, the Bank noted that “To ensure a smooth transition of operations Mr Igathe will hand over his duties to Mr Warui before his departure at the end of August,” read the statement.

“The appointment of Gerald Warui follows the board’s acceptance of the resignation of Polycarp Igathe who leaves the position at the end of August,’’ the statement added.

Igathe will leave the bank at the end of August to rejoin his previous employer, Vivo, to take up a newly created role of Executive Vice President of Sales and Marketing for Africa.

Mr. Warui, an insider who has served Equity bank for 21 years, is a career banker and has over 30 years’ experience in banking.

He holds an Executive Master of Business Administration degree from Jomo Kenyatta University of Agriculture and Technology (JKUAT) and is also a Certified Public Accountant CPA (K), and a graduate of Advanced Management Program offered by IESE Business School, Barcelona, Spain.

“The Board congratulates Mr. Warui on his appointment. The Board thanks Mr. Igathe for his dedicated and impactful service to Equity and wishes him well in his new role with one of the Equity’s most valued partners and look forward to deepening the existing relationship across the continent,” reads the statement from the bank.

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Banks

African Development Bank Approves $8M Loan to Credit Bank for SMEs

The objective of the facility is to provide access to finance to SMEs, the “missing middle” in Kenya, thereby reducing their financing gap.

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The African Development Bank Group board last Wednesday approved a $8m loan targetted financing to Kenya’s Credit Bank for lending exclusively to small and medium enterprises (SMEs).

The loan is set to mature with five years maturity with a two-year grace period. However, the interest rates was not discoled.

In a statement, AfDB said that the loans will be disbursed to Kenyan SMEs in construction, agriculture, renewable energy and manufacturing sectors.The loan will be used to finance businesses in construction, agriculture, renewable energy and manufacturing.

Credit Bank is a privately-owned commercial bank in Kenya. By end of 2018, the bank had a total assets of 17.81 billion Kenyan shillings ($173m dollars).

“It is financially sound and, as an adequately capitalized tier-3 financial institution, has a strong track record of SMEs, providing working capital and trade finance facilities. As such it is well-positioned to succeed in providing innovative longer term financial solutions to SMEs along several value chains including strategical financial solutions in Kenya,” Stefan Nalletanby, Bank Group director for financial sector development, told the Board.

The objective of the facility is to provide access to finance to SMEs, the “missing middle” in Kenya, thereby reducing their financing gap.

The facility’s proceeds will support transactions aimed at improving their productive capacities thereby enhancing entrepreneurship, job creation, income generation, and sustainable growth, leading to a multiplier effect on the country’s economic growth, according to the Bank.

Credit Bank joins the list of local lenders that are taking substantial loans from global funds such as the International Finance Corporation (IFC) and European Investment Bank, attracted by relatively more favourable terms of the debt, including lower interest rate and longer maturity.

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