KCB to boost operations with Rwf4.6 billion investments

KCB Rwanda is set to invest Rwf4.6b to boost its business this year as competition within the sector moves a notch higher. The investment is part of US$27m recapitalisation arising from KCB Group’s sale of extra shares at the Nairobi Stock Exchange, according to the bank’s Chairman. “The board of KCB Group has approved a further capital injection into the subsidiaries in 2011 to support their growth,” Peter Muthoka, KCB Group chairman said in a statement that formed part of the Group’s 2010 annual report released last week. The extra capital injection comes with a new strategy that is meant to entrench the group’s presence in the region through the appointment of James Agina as director in charge of regional business. Analysts say that the new capital should enable KCB Rwanda to handle more business, thereby enabling it to consolidate its market share that currently stands at seven percent within the local banking industry, for it to break even. The report, which further documents how KCB Rwanda’s capitalisation has progressed since it launched operations, states that in 2008, the bank received US$10.8m and a further US$12.6m in 2009 from the parent company. A further cash injection of US $16.6m was made last year to prop it up as it sought to gain more foothold in Rwanda through a branch expansion strategy. Gloria Nyambok, Head of Business at KCB Rwanda told Business Times that the funds would go towards funding the bank’s mortgage product, which she said was “doing really great.” “The response has been extremely positive and customers appreciate the revamped features which offer affordability,” she said, while elaborating on how the new mortgage product has been positioned in the market. “We have also attracted a lot of interest from property developers whom we are working closely with, to ensure the availability of high quality finished units for purchase.” In a bid to gain more market share, KCB says that its free solution based advisory services have gained wide popularity in the market. The move by KCB Group to prop up its Rwandan unit comes in the wake of reports that new entrants are keenly eyeing the local banking sector. While releasing a report on the economy for last year, the central bank said that the banking industry managed to record the highest earnings ever, prompting analysts to say that the sector is on a rebound. The resurgence in the banking sector is largely premised on government’s unwavering commitment to turn Rwanda into a financial services hub linking East and Central Africa to the larger global economy through a raft of new policy measures. Part of such measures entails issuance of new banking licenses in which new players loaded with both expertise and cash are allowed to make mostly green field entry to boost the workings of the local financial industry that is seen as key to actualisation of the country’s transformation agenda. Already, Kenyan based Equity Bank has been given a green light to set up a string of branches in Rwanda in a move that is likely to heighten competition within the sector this year. Ends

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KCB to boost operations with Rwf4.6 billion investments