GCR reinstates Bank of Africa rating

Money Markets

Bank of Africa MD Anis Kaddouri presents a dummy cheque for Sh1 million to Monica Nyoro after she won a deposit mobilisation competition. PHOTO | FILE 

By GEORGE NGIGI, gngigi@ke.nationmedia.com

A rating agency has reinstated the short and long-term ratings for Bank of Africa, following a temporary withdrawal attributed to inadequate information.

Withdrawal of the rating had drawn a sharp reaction from Bank of Africa, which termed the announcement “incorrect”.

“The initial withdrawal of June 23 related to a delay in providing information — GCR had a regulatory requirement to issue this withdrawal notice — which has since been addressed. We continue to support their ratings,” said GCR chief executive Marc Joffe in an e-mail response on Tuesday.

“The statement from GCR saying that they have withdrawn the short and long term ratings of Bank of Africa is incorrect. The rating process is ongoing and this can be verified with the agency,” the bank earlier told the Business Daily.

In a statement the agency said the bank had clarified its intention to provide it with sufficient and timely information to facilitate an assessment of the current financial position and future strategy.

Rating determines the cost of borrowing by the rated agencies and lack of it can be costly.

GCR earlier removed the controversial announcement from the website and replaced it with the clarification on Tuesday.

Bank of Africa’s profitability has been declining in the last two years, attributed to its expansion in the retail market.

The bank plans to open 10 branches in Kenya this year to push its network to 45 branches, up from seven in 2009.

The conversion from corporate banking has seen the bank’s shareholders inject capital for three years in a row.

“We received a capital injection of Sh1.6 billion ($16.5 million) in quarter two from our main shareholder BMCE. This is to support our expansion plans into the retail market,” said Bank of Africa.

BMCE is a Moroccan bank that acquired a majority stake in the lender last year from its Malian founders.

Bank of Africa did not pay dividend last year, improving its capital position and helping it comply with higher capital adequacy ratios that came to effect early this year.

In the same year it received Sh1.7 billion from its shareholders in addition to a Sh1 billion subordinated debt from the parent company. In 2013 the shareholders injected Sh1.1 billion in the bank through a rights issue and a similar amount in 2011.

In its last rating of the bank, GCR had noted the banks decision to shift to retail banking as a positive step.