KCB shareholders approve Sh10bn rights issue

The cash call, agreed on during the AGM, is slated for later this year and will see the lender create an additional one billion new shares.

KCB Group CEO Joshua Oigara speaks during the launch of the Islamic banking at Hilton Hotel in Nairobi April 9, 2015. The bank's shareholders on April 29,2016 approved Sh10bn rights issue and Sh2 per share scrip dividend to be equally divided between cash payment and shares. PHOTO | SALATON NJAU | NATION MEDIA GROUP  

 The cash call, agreed on during the AGM, is slated for later this year and will see the lender create an additional one billion new shares.

In Summary

• Mr Oigara told the shareholders that the additional funds would be used to boost the lender’s minimum capital requirements and double its loan book and deposits.
• KCB Group Chairman Ngeny Biwott said the additional funds will enable shareholders to increase their investment without incurring dealing costs.
• In 2010, KCB managed to raise Sh12.4 billion in a rights issue.
• Shareholders also agreed on a Sh2 per share dividend to be divided equally between cash payment and shares.

By BRIAN NGUGI
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Kenya Commercial Bank  Group shareholders on Friday gave the nod to the lender’s plan to raise Sh10 billion through a rights issue to boost its capital levels.

The cash call — agreed on during the Annual General Meeting held in Nairobi —  is slated for later this year and will see the lender create an additional one billion new shares subject to regulatory approvals.

“We believe the market fundamentals are right for us to raise extra funds and we are confident about the stability of KCB. We remain focused on our strategy of growing the business in East Africa and spread our wings further in Africa,” said KCB Group CEO Joshua Oigara on the sidelines of the AGM.

Mr Oigara told the shareholders that the additional funds would be used to boost the lender’s minimum capital requirements and double its loan book and deposits.

SCRIP DIVIDEND

KCB Group Chairman Ngeny Biwott said the additional funds will enable shareholders to increase their investment without incurring dealing costs.

“The scrip dividend is part of KCB Group’s strategy to conserve cash payout from the company’s retained profits in the light of its commitment to business growth, and in order to allow its shareholders to derive value on account of higher dividend in future due to increased shareholding, “said Mr Biwott.

In 2010, KCB managed to raise Sh12.4 billion in a rights issue.

Meanwhile, Mr Oigara said the lender would in the next two years concentrate on stabilising its business with an eye on expanded markets after the period.

KCB is eyeing entry into Somalia, Mozambique and the Democratic Republic of Congo, among other countries.

KCB through its seven operations — Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan and Ethiopia (representative office) — is a diversified financial services provider, and is active across  East Africa, targeting both retail and wholesale customer segments.

The shareholders also gave a go-ahead for the payment of a dividend of Sh2 per share —  half to be paid in cash and the balance in the form of shares, known as a scrip dividend.

KCB announced a 16 per cent increase in profit after tax for the 12 months ending December 2015 on the back of higher net interest income, non-funded income and operational efficiencies.

Post-tax earnings hit Sh19.6 billion during the period, up from Sh16.8 billion in 2014.