March 8, 2018 / 6:42 AM / in 10 days

UPDATE 2-Kenyan bank KCB to boost mobile payment service as profit flattens

(Recasts with 2018 plans)

By George Obulutsa

NAIROBI, March 8 (Reuters) - Kenyan bank KCB Group plans to set up its own mobile payment platform this year to handle the jump in transactions via phones, its CEO said after reporting 2017 results.

Kenya’s biggest lender by assets, posted flat pretax profit of 29.1 billion shillings ($287.55 million), with growth having slid from the 10 percent achieved the previous year.

Chief Executive Joshua Oigara said KCB planned to spend $9 million on its mobile payments platform to help it to increase the number of transactions it can handle.

The bank said that 57 percent of its transactions were via mobile phone last year, up from 53 percent a year earlier.

KCB already has mobile banking services and collaborates with telecoms company Safaricom for use of its M-Pesa mobile payments service.

“We need to have more bandwidth. And that is the investment we are making this year. It is not a big investment; $9 million in our view, and that is what we are going to do and have it ready by the end of this year,” Oigara said.

“So we are targeting 100 transactions per second from the current 30 to 35.”

KCB, which also operates in neighbouring Uganda, Tanzania, Rwanda, Burundi and South Sudan, said net interest income rose to 48.4 billion shillings from 47.03 billion shillings in 2016.

Last year Kenya’s economy was hit by drought and political turmoil during the election cycle that the Finance Ministry said cut nearly 1 percent from its economic growth forecast. The economy expanded by an estimated 4.8 percent in 2017.

Credit growth also slowed, partly because of a cap on commercial bank lending rates imposed in September 2016.

Oigara said that KCB and the industry at large welcomed recent pronouncements by government officials that it was a good time to revisit the lending rate caps.

Late on Wednesday the International Monetary Fund said the government had committed to modify the caps.

“We believe it is the right time ... We very much support the review of the interest rate caps,” Oigara said.

The bank said that total assets rose to 647 billion shillings from 595.24 billion shillings and customer deposits rose to 500 billion shillings from 448.17 billion shillings. ($1 = 101.2000 Kenyan shillings) (Reporting by George Obulutsa Editing by Biju Dwarakanath and David Goodman)

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