KCB Group Limited shareholders have approved the Bank’s plan to raise Ksh10 billion through a rights issue to boost its capital levels.
The cash call— agreed on during the Annual General Meeting held in Nairobi—slated for later this year will see the lender create an additional one billion new shares.
The shareholders also gave a go ahead for the payment of a dividend of Ksh2 per share, a half to be paid in cash and the balance in the form of shares, known as a scrip dividend.
KCB Group Chairman, Ngeny Biwott said KCB plans to use the funds to support its regional expansion and to boost its minimum capital requirements to allow double its loan book and its deposits.
“The Scrip Dividend is part of KCB Group’s strategy to conserve cash payout from the Company’s retained profits in the light of its commitment to business growth, and in order to allow its shareholders to derive value on account of higher dividend in future due to increased shareholding, ”said Mr Biwott.
“The issue will enable shareholders to increase their investment without incurring dealing costs,” he added.
KCB announced a 16% increase in profit after tax for the 12 months ending December 2015 on the back of higher net interest income, non-funded income and operational efficiencies. Post Tax earnings hit KShshs.19.6 billion during the period, up from KShs 16.8 billion in 2014 with the contribution from KCB’s international business rising to 12.8% up from 8.3% the previous year. The increase has been driven by increased lending and new income streams from new business lines that the bank has ventured into in the recent past.
In 2010, KCB managed to raise Ksh12.4 billion in a rights issue. The bank says it is continuously monitoring its capital and funding position to ensure they are within the regulatory and internal buffers.
“We believe the market fundamentals are right for us to raise extra funds and we are confident about the stability of KCB. We remain focused to our strategy of growing the business in East Africa and spread our wings further in Africa,” said KCB Group CEO Joshua Oigara.
KCB through its seven operations—Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan and Ethiopia (representative office) —operates as a diversified financial services provider, and is active across the East African region, targeting both retail and wholesale customer segments. The Bank has been positioning itself as a continental lender, seeking to take up bigger infrastructure projects in Africa, with a plan to be present in at least 10 markets by 2020. KCB is eying entry into Somalia, Mozambique and the Democratic Republic of Congo among other countries.
KCB has in the last one year been able to develop superior expertise in micro lending, through a strategic partnership and product innovation with Safaricom, the mobile company. Latest Bank statistics show the Bank disbursed over KSh 8Billion in loans to over 5 million KCB-Mpesa customers, instantly on their mobile phones. The focus on the micro, small and medium enterprises is to not only harness the large numbers of businesses in the region but to also work with them to grow into mid-sized and even large corporates of the future.