The Kenya Commercial Bank (KCB) group Board of Directors has approved an additional Sh1.9 billion capital injection to support the growth of the bank’s struggling regional subsidiaries.
Group chairman Peter Muthoka said the increased investment is meant to help the subsidiaries speed up their financial performance, and yield better returns to the shareholders.
The beneficiaries of the new funding include KCB Uganda (Sh1.1 billion), KCB Tanzania (Sh225 million) and KCB Rwanda (Sh557 million). With the exception of KCB Sudan, these subsidiaries returned an accumulated net loss of Sh259 million last year, diluting the Group’s overall profitability.
Performed better
KCB Uganda reported a loss of Sh409 million, while KCB Tanzania and KCB Rwanda registered losses of Sh111 million, and Sh318 million, respectively. KCB Sudan, however, performed better than expected, returning a profit before tax (PBT) of Sh581 million.
“KCB Sudan reported a good profit last year, and is poised for better returns in 2011 whereas KCB Rwanda and KCB Uganda are moving closer to profit making. KCB Tanzania is now stable, and should become more profitable going forwards,” said Muthoka. He, however, said all regional subsidiaries would be expected to break- even this year.
Muthoka also said the KCB board would be reviewing the operations of each subsidiary as it seeks the right business model which delivers increased returns to the investors.
“The board has agreed to increase investment in the subsidiaries this year to enable them accelerate their financial performance,” Muthoka told shareholders during the bank’s 40th annual general meeting (AGM) in Nairobi, yesterday. Muthoka said the board has also approved wide-ranging business
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