Tanzania Banking Leader Plans Further Regional Expansion

KCB Bank has announced that its business in the Tanzania banking sector as well as in the southern Sudan banking sector has crossed the profitability threshold and for the next year it will begin to focus on consolidating its regional network.

Following this consolidation and based on the early successes that the KCB Bank experiences, it has also announced its intentions to establish a pan-African banking machine in the next five years.

KCB (Tanzania) Limited became incorporated in 1997 and was established in order help provide a wide range of financial products to the emerging economies in the East African region.

Branch locations for KCB Tanzania can be found in Mwanza, Arusha, Mlimani, Kariokor, Zanzibar, Samora, Uhuru and Msimbazi.

According to the chief executive of KCB Bank, Martin Oduor-Otieno, before the bank enters into the wider African market starting next year, it has made plans to open an additional 20 additional branches in Tanzania, the Sudan and Uganda as well as an additional 30 branches in Kenya.

In a report by the Guardian, Mr. Oduor-Otieno went on to say that the bank expects to spend approximately TZS 1 billion over the next year opening the 50 new branches this year.

Mr. Oduor-Otieno did not indicate how the bank will finance the anticipated pan-African expansion project, but said that the bank will need to raise capital for funding.

Overall, the project is expected to help increase the bank’s asset base by 59 percent to TZS 191 billion.

With this being said, Mr. Oduor-Otieno also went on to say that because of the global economic downturn, he expected this year to be difficult for the banking industry as a whole.

“The outlook is difficult, but we have come into 2009 with a very strong balance sheet, which should cushion us in the short term,” he said.

In spite of an 88 percent rise in net loan loss provisions against a 45 percent loan book growth, KCB Bank recorded improvements in other areas of its operations, including a 39 percent increase in the interest income, a 28 percent increase in fees and commissions, and a 94 percent increase in exchange trading income.

In addition analysts with the Sterling Investment Bank said that they believe that the bank is performing on target.

“In our opinion, the bank is performing well on target, with EPS (earnings per share) rising to Sh1.89 per share against our projected EPS of Sh1.88 for 2008,” said the analysts, “In the next annual financial results, we expect it to break Sh2 EPS barrier, with value creation through increased dividend payment and possibly capital gains in the stock market (when the market recovers) continuing well into the foreseeable future.”