Commercial Bank of Africa (CBA) plans to raise Sh1.5 billion through a rights issue to finance its expansion programme.
The bank intends to open at least nine branches in Kenya and Tanzania in the next six months.
CBA’s managing director Isaac Awuondo said in Nairobi on Monday that the financier’s board of directors had authorised the issue that was set to be completed by the end of the year.
“As of September we had a capital base of Sh9 billion. We intend to source another Sh1.5 billion from a rights issue which has already been approved by the board,” said Mr Awuondo.
Currently, the bank has 20 branches in Kenya most of them located in Nairobi and is targeting to increase the local branch network to 22 with the opening of Thika and Nyali branches by January next year.
The bank which is actively involved in transactional financing and is curving a niche in trade financing wants to double its branch network in Tanzania from the current seven in half a year.
“We are going through an evaluation of the market to see where we will be relevant,” said Mr Awuondo, adding that the bank would rely on the Nairobi office to enter Uganda and the rest of EAC states as it expanded in the region.
CBA joins a host of other companies that have chosen the rights issue as the route to source funds for expansion in what is set to heighten competition for investor funds.
Recently, national carrier Kenya Airways announced a planned rights issue to aid the company’s expansion plan as it prepares to harness business opportunities both in international and local routes.
The bank is counting on its $5 million rebranding exercise launched on Monday to strengthen its brand and its profitability to boost the capital call. It also plans to introduce internet and mobile banking platforms.
CBA’s net profits have been on the increase over the last five years. Last year, the bank posted a net profit of Sh2.07 billion compared to Sh1.41 billion and Sh1.35 billion realised in 2009 and 2008 respectively.
Its deposit base has grown from Sh30 billion to Sh60 billion this year.