* First-half pretax profit jumps 16 pct
* To get an international credit rating this year
* Funds to be deployed in lending to home buyers
(Recasts with potential bond issue, adds quote, writes through)
By Duncan Miriri
NAIROBI, July 31 KCB Bank, Kenya's
largest lender by assets, plans to raise funds from
international debt markets for lending to the real estate
sector, its CEO said after announcing a 16 percent jump in
Kenya successfully issued its first sovereign bond, worth $2
billion, last month, setting a benchmark for local companies
that may wish to tap debt markets abroad.
"We are very keen to take the bank into the international
debt market to raise funds for long-term investment for our
mortgage businesses," Joshua Oigara told an investor briefing.
KCB will get an international credit rating this year, he said.
The bank, which also operates in Tanzania, Rwanda, Uganda,
South Sudan and Burundi, has a target of writing 1 million new
mortgages, in a country where annual demand for housing
outstrips supply by about 100,000 units, Oigara said.
Fees, commissions and foreign exchange trading income helped
KCB post a 16 percent rise in first-half pretax profit to 11.67
billion shillings ($133 million).
Bad debts were more than targeted, at 8.8 percent of the
portfolio, the chief executive said, but he said the outlook was
brighter after the Kenyan government paid contractors, who were
having difficulties repaying loans following earlier delays.
The full-year target for its non-performing loans (NPL)
ratio was 6 percent, but Oigara said he hoped the level could be
brought even lower. "The internal target is 4.5 percent for the
NPL ratio," he told an investor briefing.
Fees and commissions income rose 13 percent to 5.67 billion
shillings, while income from foreign exchange trading jumped 25
percent to 2.22 billion. Net interest income rose by 7 percent
to 17.13 billion shillings.
The bank's newly launched insurance business was growing at
about 1,000 percent on an annual basis, Oigara said, adding it
had the potential to contribute 15 percent revenue to the group
in the next three to five years.
KCB was studying the possibility of entering new markets
like the Democratic Republic of Congo, Mozambique, Somalia and
Zambia, Oigara said.
The bank has opened two new branches in South Sudan's
capital Juba this year. It already had 21 outlets in the
country, pointing to sustained confidence in a market dominated
by KCB, but one that was hit by an eruption of violence last
Provisions for bad debts in South Sudan jumped during the
fighting, Oigara said. KCB derives 40 percent of its business in
South Sudan from transaction services and another 30 percent
from foreign exchange trading, he said.
Shares in KCB rose by close to a percentage point after the
results to trade at 54.50 shillings on Thursday afternoon.
"We retain our 'hold' recommendation. We expect minimal
adjustment to our fair value of 52.80 shillings," Standard
Investment Bank said in a research note after the results.
($1 = 87.7500 Kenyan shillings)
(Editing by James Macharia and Susan Fenton)