UBA Plans to Spend $50 Million in Kenya on Acquisition and New Branches
UBA Plc, Nigeria’s fourth-largest bank, will inject $50 million into its Kenyan unit in the first half of 2011 to fund a possible acquisition and open more branches, UBA Kenya Bank Ltd. Managing Director Manz Denga said.
The funds will help cushion the lender against operating losses that resulted from setting up operations in East Africa’s biggest economy, Denga said in an interview on Dec. 1 in Nairobi, the Kenyan capital. He didn’t elaborate on the bank’s acquisition plans. The loss totaled 92 million shillings ($1.1 million) in the nine months through September, he said.
UBA became the second West African bank to invest in Kenya in October 2009, after Ecobank Transnational Inc., the Togolese lender that operates in 29 African countries, bought East Africa Building Society Bank in June 2008.
“In our first year of operation, we have recorded losses due to the huge capital expenditure outlay in setting up operations, but with the new capital we will stabilize our performance and start recording profits,” Denga said.
Lenders in Kenya have posted higher profit this year amid accelerating economic growth after the central bank slashed interest rates to a record low to boost credit extension to businesses and households. Lenders’ assets grew 25 percent to 1.6 trillion shillings in the 12 months through August, as deposits increased by 22 percent to 1.2 trillion shillings, according to the Central Bank of Kenya. Kenya has 43 commercial banks, it said last month.
UBA, based in Lagos, currently has three branches in Kenya and will open three more by February 2011. The lender has offices in 16 African countries.
The bank plans to offer insurance products in Kenya through UBA Metropolitan, a partnership with MMI Holdings Ltd., the South African insurer formerly known as Metropolitan Holdings Ltd. It also has long-term mortgage facilities aimed at enhancing home ownership in the country, Denga said.
Other services in the pipeline include credit cards and asset-financing facilities, he said, without elaborating.
UBA’s shares have risen 1 percent so far this year, underperforming a 19 percent advance in the Nigerian Stock Exchange’s benchmark All-Share Index over the same period.
To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at email@example.com.