Standard Chartered Bank of Kenya is targeting last year's sector-leading profit growth but it is too early to tell how the full year will pan out, its chief executive said on April 16. Ranked the third largest bank in the east African nation by assets, StanChart posted a 43 percent jump in its pretax profit in 2009, the highest growth rate in the industry.
"If we did as well as we did last year it will be exceptional and so we are aiming to do as well," Richard Etemesi told Reuters.
Like other Kenyan businesses, the bank, which is majority owned by UK-based Standard Chartered, could benefit from faster growth in east Africa's largest economy, Etemesi said. Officials expect the economy to expand by about 4 percent this year from an estimated 2-2.5 percent last year, lifted by good rains which could boost the agriculture sector after several years of decline.
"We are not seeing the same kind of negative perceptions that clouded the whole of last year especially in the business sector. There was a lot of doom and gloom ... this year there is a lot of positive sentiment," he said. He attributed the bank's good performance in its last full year to the culmination of several years of work aimed at transforming the business.
"We have moved from a deposit-taking institution where we used to take deposits and put them in Treasury bills to a full retail and commercial bank," he said.
StanChart Kenya plans to double the contribution of business from the small and medium enterprises from 10 percent this year in order to boost its performance. It is also seeking to be a banker to other banks, Etemesi said. "Previously we did not focus on it as a business segment but now we are focusing on it as a revenue segment and therefore we are talking to other bankers. They use us as their correspondent bank," he said.
The bank plans to raise its number of outlets in the country to 40 from 33 in an unspecified period, Etemesi said, adding the bank was well capitalised at about 16 or 17 percent of assets.
"If the expansion of the economy is realised, we might find that capital is used up in terms of providing facilities to our customers, we will then have to consider how to increase our capital," he said.
Fundraising options could include issuance of preference shares, a rights issue or a combination of both, he said. Political instability is the biggest concern for Kenyan businesses haunted by memories of a bloody post-election crisis in 2008 and who have to live with constant disagreements in the ruling coalition formed to end the bloodshed.
The chief executive said that besides politics, rising incidences of banking fraud were worrying. "Because of the perceived impunity, whereby someone who commits a fraud knows that by the time the case gets heard and the sentencing is done is five, six years down the road because of the judicial process, they are tempted to take advantage," he said.
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