Friday, May 6, 2011

KCB subsidiaries post profits for the first time

File| Nation KCB Group CEO Martin Oduor-Otieno (Left) and chaiman Peter Muthoka at a past function.

File| Nation KCB Group CEO Martin Oduor-Otieno (Left) and chaiman Peter Muthoka at a past function. 

By Nation Correspondent

For the first time since Kenya Commercial Bank begun regional expansion in 2007, its subsidiaries in Tanzania, Uganda and Rwanda have recorded a profit.

On Friday, during the company’s annual general meeting in Nairobi, the bank said the subsidiaries recorded profit during the first three months of the year.

As at the end of December 2010, only Southern Sudan was making profits among the bank’s four subsidiaries outside Kenya.

While Southern Sudan made Sh580.9 million in pre-tax profit for the year ended December 2010, Tanzania, Uganda and Rwanda recorded losses of Sh110.6 million, Sh409.3 million and Sh317.5 million during the period.

KCB group chief executive, Martin Oduor-Otieno, told shareholders that the subsidiaries were young businesses, which required significant investment that took time to be recouped and make profit.

“We have good news from the subsidiaries,” he told shareholders during the bank’s AGM at Kenyatta International Conference Centre.

“In the first quarter of 2011, they have all turned the corner and we are pleased to announce that after years of making investments, we will be seeing profits in 2011 from them.”

KCB chairman, Peter Muthoka, said the bank will within the year inject Sh1.1 billion into KCB Uganda, Sh225 million into KCB Tanzania and Sh557 million into KCB Rwanda, to support their growth efforts.

A new position of regional director has also been created to oversee regional businesses, he said.

Mr Oduor-Otieno defended the bank’s increased reserves, which rose 79 per cent from Sh18.1 billion in December 2009 to Sh32.4 billion in December 2010.

“If you do not have adequate reserves, you cannot as a bank take deposits or give loans,” he said.

“We need large reserves so that we can give more loans and take more deposits, which in turn will give us higher yields.”

Shareholders unanimously voted to replace Ernst &Young with KPMG Kenya as auditors of the bank.

The AGM also approved payment of Sh1.25 a share as dividend for the year-ended December 2010 to registered shareholders on May 10, 2011. The bank paid Sh1 a share the previous year.