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Dr. Njoroge Reappointed as CBK Governor

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Dr. Patrick Njoroge has been reappointed as the Central Bank of Kenya (CBK) governor for a second and final four-year term by President Uhuru Kenyatta.

The President announced the reappointment through a special gazette notice dated May 24, 2019 and issued Thursday morning.

“In exercise of the powers conferred to me by section 13 (2) of the Central Bank of Kenya Act, I Uhuru Kenyatta President and Commander of the Republic of Kenya Defence Forces re-appoint Patrick Ngugi Njoroge to be the governor of the Central Bank of Kenya for a period of four years with effect from the 11th June 2019,” said President Kenyatta.

This new term will see Dr. Njoroge serve until June 2023.

His first appointment as CBK governor was on June 26, 2015 with his four-year renewable term expected to come to a close on June 19 this year.

In the same vein, CBK deputy governor Sheila M’Mbijjewe and CBK board chairman Mohammed Nyaoga also had their terms renewed by the President.

Performance

Formerly an advisor to the International Monetary Fund, Dr. Njoroge assumed office during a time when the country faced inflation risks and a currency slump.

Under his watch, the rate of inflation has remained largely under control at an average of 6.2 percent during the period and within the 2.5 – 7.5 target band set by the government.

On the other hand, the shilling has experienced a fair amount of stability, remaining at an average of Sh101.97 to the US dollar. The governor has also denied claims of over-valuation of the Kenyan shilling, saying it derives its value from the forces of demand and supply.

His entry into the Central Bank has led to the dawning of a new order for Kenyan financial institutions with banks being made accountable for the enforcement of banking regulations.

Several banks have also been placed under receivership including Dubai Bank – which is currently undergoing liquidation, Chase Bank – which as recently reopened and Imperial Bank – which is the subject of a sale transaction with the KCB Group.

During his reign, commercial banks have limited credit extended to small businesses following the enactment of a law that caps lending rates at no more than four percentage points above that of the CBK.

The measure was put in place to counter the high cost of credit to individuals and private businesses at interest rates of more than 20%. The result, however, has been that banks are applying more caution in their lending thus reducing the flow of credit in the market.

According to data by the CBK, private sector credit has experienced a 4.9 percent growth in the 12 months to April from 4.3 percent posted in March.

However, contrary to the Central Bank’s 12 – 15 percent target rate, credit growth has remained well below that.

New Currency

Despite facing criticism from some sections, the CBK recently rolled out the much-awaited and controversial new-generation currency in line with the dictates of the constitution.

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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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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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