By GEORGE NGIGI
In Summary
- Family Bank targets to issue the first tranche of the bond at the end of this month to support a fast-growing loan book.
Family Bank has received approval to issue a Sh10 billion bond as it seeks to fund its expansion plan.
The mid-sized lender targets to issue the first tranche of
the bond at the end of this month to support a fast-growing loan book.
“The bank’s growth momentum and strategic plans
needed to be sustained hence the need to raise additional capital. The
programme has been structured in such a way that the bank can
continuously raise funding for the next five years for its strategic
initiatives up to the Sh10 billion aggregate limit,” said chief
executive Peter Munyiri.
Family Bank’s total capital to total risk-weighted
assets ratio stood at 16.3 per cent as at end of June, marginally above
the statutory minimum of 14.5 per cent.
The subordinated debt will contribute to the bank’s total capital which currently stands at Sh10.4 billion.
The lender’s loan book grew by 24 per cent in the
first six months of the year to Sh46.3 billion from Sh37.9 billion in
December forcing the bank to look for new capital.
Last year, Family Bank raised Sh3 billion from its shareholders through a rights issue to boost its core capital.
The bank, voted the fastest growing bank in the
country, posted a 32 per cent growth in profit for the six months to
June riding on the loan book expansion to Sh1.14 billion. The lender did
not disclose details of the bond issue.
Family Bank joins other lenders such as Imperial and Chase Bank who have issued bonds this year to support their capital needs.
Imperial Bank, which issued its bond earlier this
month, offered a fixed coupon rate of 15 per cent, higher than the
return of 13.1 per cent offered by Chase Bank which issued its bond in
June.
Interest rates have been rising following Central
Bank of Kenya’s efforts to support a weakening shilling by tightening
the monetary policy.
Imperial Bank is yet to release the results of its Sh2 billion debt issue but analysts had termed its returns attractive.
Chase Bank’s first tranche was oversubscribed with investors offering the lender Sh4.8 billion against a target of Sh3 billion.
South African microfinance lender, Real People also
issued a bond last month which brought in a total of Sh1.63 billion
against Sh2.5 billion target, which the company said was partly due to
the issue coming when the market was under tight liquidity.
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