NAIROBI: Kenya Commercial Bank Group has received positive ratings from global credit rating agencies Standard & Poor’s and Moody’s. The two agencies gave KCB favourable solicited credit scores of B+ and B1 boosting the group’s plans to tap the international market for expansion cash.
“While we anticipate credit losses to rise, we also expect the Group’s access to low-cost deposits and well established corporate lending franchise to support more stable credit losses and stronger margins than the industry average over the next 12 to 18 months,” S&P said in a statement.
KCB chief executive Joshua Oigara said on July 30 that the bank planned to borrow $250 million (Sh26.31 billion) before end of the year from international lenders, including World Bank’s private sector lending arm – the International Finance Corporation – and the European Investment Bank.
This would bring its foreign debt to $400 million this year, after it secured $150 million the IFC in April for onward lending to small and medium enterprises. “We continue to leverage on innovation to simplify access to financial services, focus on customer experience and boost capital buffers to build an African business for the future,” Oigara said in a statement yesterday.
Moody’s said it expected the bank’s capital levels to remain strong supported by internal sources underpinned by stable growth in profitability and a dividend payout policy of 50 per cent. The scores accorded to KCB are same as those assigned to Kenya before it successfully floated a $2 billion Eurobond in June, last year.
“We do not rate Kenyan banks above the sovereign rating because of the direct (high government bonds exposure) and indirect effects the sovereign (bond) would have on a bank’s operations in case of a financial stress” said S&P. KCB’s total capital to total risk weighted assets closed June at 15.9 per cent, reduced from 20.7 per cent a year before – above regulatory minimum threshold of 14.5 per cent.
