National Bank of Kenya Ltd. will raise as much as 10 billion shillings ($119 million) in a rights offer to fund an expansion plan as it seeks to quadruple revenue by 2017, Managing Director Munir Sheikh Ahmed said.
The sale of shares to existing shareholders is expected to take place by the first quarter of 2014, Ahmed said in an interview at his office today in Nairobi, the capital. The funds will be used to open 10 new branches in Kenya and start operations in South Sudan, Uganda and Somalia, he said.
“The strategic plan is to ensure the bank’s potential, described as a sleeping giant, is realized in the next five years,” Ahmed said. The bank is targeting revenue of 31 billion shillings by 2017, compared with 8 billion shillings last year, he said.
National Bank was the only publicly traded lender in Kenya to report a drop in profit in 2012. Net income dropped 53 percent to 729.8 million shillings as earnings from interest on loans dipped 6 percent to 4.77 billion shillings. Results in the first quarter of 2013, which have to be published, suggest the company will achieve an improved performance this year, Ahmed said.
“We expect better growth on a year-to-year basis,” he said.
Ahmed took over as managing director on Aug. 1 from Reuben Marambii, who held the post for 14 years after being seconded by the Central Bank of Kenya in 1999 to save the loss-making lender from collapse and return it to profit.
National Bank was founded in 1968 and began trading its shares on the Nairobi Securities Exchange in 1994, when the government sold 32 percent of its stake. In 1996, the state reduced its stake to 22.5 percent. The state-owned National Social Security Fund holds 48.06 percent of the lender.