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KCB Bank Rwanda to Boost 2014 Profit by Reducing Bad Debts

The Headquarters of the National Bank of Rwanda Stand in Kigali
Rwanda’s central bank in June lowered its key lending rate for the first time in almost three years to 7 percent in a bid to stimulate credit and spur the economy. Photographer: Will Boase/Bloomberg

Jan. 7 (Bloomberg) -- KCB Bank Rwanda Ltd. plans to focus this year on restructuring bad debts to almost halve the default rate in line with a regulatory requirement, said George Odhiambo, head of retail banking.

Non-performing loans rose to about 9 percent of net credit at the end of September, above the 5 percent limit set by the central bank, Odhiambo said in an interview in the capital, Kigali. Bad debts increased to 4.4 billion Rwandan francs ($6.5 million) as of Sept. 30 from 2.3 billion francs a year earlier, according to the company’s latest financial statement.

“We are making efforts to make a recovery, restructure the same loans with the customers and have more engagement with them so to avoid the worst outcome,” he said on Dec. 31.

Rwanda’s central bank in June lowered its key lending rate for the first time in almost three years to 7 percent in a bid to stimulate credit and spur the economy. Policy makers left the rate unchanged at meetings in September and December.

The bank, a unit of Kenya Commercial Bank Ltd., targets increasing its 8 percent Rwandan market share to “double digits” this year and to triple the number of customers to 75,000, Odhiambo said.

Performance Targets

The bank may not meet its 2013 performance targets, even as it put in place a turnaround plan after posting a 844 million-franc loss in 2012, Odhiambo said.

The lender recorded net income of 79.5 million francs in the nine months through September and it plans to release full-year results in March, he said.

“We will not realize the projections” for last year, he said, declining to give the target.

Kenya Commercial Bank, which also has operations in Uganda, Tanzania, South Sudan and Burundi, is cross-listed on Rwanda’s stock exchange.

Shares of the company, Kenya’s largest lender by market value, traded unchanged from yesterday at 48.50 shillings, the highest since Nov. 28, by 11:52 p.m. in Nairobi, the capital, according to data compiled by Bloomberg.

To contact the reporter on this story: Saul Butera in Kigali at sbutera2@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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