KCB said regional oil and gas discoveries may boost earnings as much as 30 percent as the finds spur project-finance opportunities and economic growth.
The bank, with operations in six East African countries, plans to target transport, housing and other infrastructure projects where the discoveries have been made, Chief Financial Officer Joshua Oigara said in an Aug. 7 interview in Nairobi, Kenya’s capital. The stock gained as much as 2.1 percent today.
“We see a lot of potential not just in the big projects but also in the value chain,” Oigara said. “When you put in the element of oil and gas in this region, it has potentially the ability to increase our own growth by 20 to 30 percent for a period of another seven to eight years.”
KCB has started the process of obtaining an international credit rating, which it expects to complete by end of the current financial year, he said.
“This will give the bank an opportunity to access international debt capital markets as the banks moves to expand its sources of funds in the mid-term period,” Oigara said.
“Our regional businesses are a key part of our business, they are becoming much more critical in the group’s performance,” Oigara said. All of the units, which account for 15 percent of KCB’s assets, are profitable with the exception of Burundi, which is expected to break even in two years after starting operations in June, he said.
The bank intends to open offices in three more African countries over the next three to five years, he said. The 19- nation Common Market for Eastern and Southern African states is being targeted as an area of expansion, Oigara said, without providing more details. The members of Comesa, as the trading bloc is known, include the Democratic Republic of Congo, Ethiopia and Zimbabwe.
Kenya Commercial’s cost to income ratio target is 52 percent by the end of 2012 from 60 percent a year earlier. At the end of June, the ratio was 56 percent, Oigara said.
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