NIC sets aside Sh506m for Tanzania arm

Money Markets

 

Pedestrians walk past a NIC Bank branch in Nairobi. The lender ventured into Tanzania in 2009 by acquiring a 51pc stake in Savings & Finance Commercial Bank. Photo/FILE 

By GEORGE NGIGI, gngigi@ke.nationmedia.com

In Summary

• NIC's Tanzanian subsidiary is seeking to raise additional Sh366 million in a rights issue.
• The Tanzanian unit last year posted a Sh277 million loss compared to a Sh103 million after-tax profit a year earlier.
• NIC ventured into Tanzania in 2009 by acquiring a 51 per cent stake in Savings & Finance Commercial Bank, which it later renamed in line with the group’s brand.

NIC Bank has set aside Sh506 million to inject in its Tanzanian subsidiary in a rights issue that could see it increase its shareholding in the lender which slipped into loss-making last year.

The mid-sized Kenyan lender last year increased its shareholding in the unit by 18 per cent through a rights issue, pushing its stake to 69 per cent. It had then disclosed its intention to replicate the same this year in a second cash call.

The Tanzanian subsidiary has planned to raise an additional capital of Sh468 million (Tsh8.5 billion) through the rights issue, which implies that NIC will require about Sh322 million to take up all its rights.

But the bank, associated with the wealthy Phillip Ndegwa family, has already invested Sh366 million in the issue underlining its appetite for the stock.

“The board of directors of the bank approved full participation of a second rights issue of Tsh8.5 billion and the take-up of rights that are not exercised by existing shareholders,” the bank said in its annual statement.

The Tanzanian unit last year posted a Sh277 million loss compared to a Sh103 million after-tax profit a year earlier and a Sh109 million profit in 2011

The loss was attributed to a jump in bad loans forcing the lender to increase its provisions. The bank has issued loans of Sh4.8 billion and collected Sh6 billion deposits in the country.

NIC Bank ventured into Tanzania in 2009 by acquiring a 51 per cent stake in Savings & Finance Commercial Bank, which it later renamed in line with the group’s brand.

READ: NIC Bank lines up Sh608m for Dar subsidiary

The bank has two branches in Dar es Salaam and in Mwanza, Arusha and Kahama.

“We remain very optimistic about the prospects of our Tanzania business which has historically made profits.  Last year, we had an extraordinary year in which we decided to tighten our provisioning methodology,” said NIC’s director of marketing and communication Rosalind Gichuru.

The Nairobi Stock Exchange-listed NIC Group also operates in Uganda besides having an insurance firm, stockbrokerage and an investment banking arm.

Not listed

The group posted an after-tax profit of Sh3.2 billion last year. The bank’s stock is trading at Sh63.50 at the NSE, up 21 per cent in the past 12 months.

NIC Bank Tanzania is not listed on the Dar es Salaam Stock Exchange.