Subsidiaries of KCB Group have received the board’s green light to undertake joint lending arrangements in a move that is expected to see East Africa’s largest bank by asset base tap more into dollar-denominated lending opportunities at a time when the region is grappling with the inaccessibility of hard currency.
KCB Group CEO Paul Russo says going forward the group would be better positioned to optimise its dollar holdings, following the reorganisation of its treasury function to depart from the subsidiary-specific design to group-level design, which allows for syndication by at least two subsidiaries if opportunities present themselves for large-ticket dollar-denominated lending.
“There is still a lot for us to do in terms of optimising the value that we can get from subsidiaries. Today, we run treasury functions for KCB at business unit levels. We are at that point where we need a group Treasury function to optimise value from the various business units and the value that TMB brings and that has received support from the board,” said Mr Russo.
He added that the lender is currently at the tail end of the major transaction undertaken by syndication between KCB Kenya and the DR Congo subsidiary, TMB.
The units are the group’s biggest subsidiaries by asset base holding Sh1.2 trillion and Sh272.0 billion, respectively, according to half-year results for the six months ended June 2023.
In this period, KCB Group generated Sh5.9 billion from foreign exchange trading income, posting 20.4 percent growth compared to the earnings in the same period in 2022.
“If you see a business like Tanzania and its performance over the last five years, I think if there was sufficient support from a group treasury and optimisation perspective it could have done a lot more. Cross-syndication on debt offers a big opportunity and we have got a very significant transaction that we are concluding between KCB Kenya and TMB. If, for example, KCB Uganda is sitting on excess dollars, where is it best to place that liquidity and get returns from?” posed Mr Russo.
KCB Group’s half-year net earnings stood at Sh16.1 billion, down from Sh19.6 billion in the same period in 2022, as the group took a hit from the plunge of its subsidiary, National Bank of Kenya, back into loss territory.
Source: Business Daily