KCB Group is set to inject an additional KES 938.8 million into the National Bank of Kenya (NBK) to help the subsidiary conform with the Central Bank of Kenya (CBK) capital adequacy requirements.
According to a report by Business Daily, NBK lies in breach of its total capital to total risk-weighted assets with the minimum statutory capital set at 14.5 percent against the bank’s ratio of 13.5 percent.
However the lender stated that the capital injection whose format (equity or debt) is yet to be disclosed nevertheless is dependent on CBK approvals.
“Assuming the regulator approves, we will be compliant with NBK capital adequacy requirements by the end of March,” said KCB Group chief executive Paul Russo.
Currently, KCB has invested an estimated KES 8.45 billion in NBK to bring it into compliance with capital requirements which includes a KES 5 billion equity financing when buying the bank out in 2019 and a KES 3.45 billion loan later converted to equity.
NBK however meets other requirements such as core capital that stands above the KES 1 billion threshold at KES 11 billion. Additionally, NBK’s liquidity ratio stands above the minimum statutory ratio of 20 percent at 40.5 percent.
Other metrics achieved by NBK include core capital to total risk-weighted assets and core capital to total deposit liabilities.
NBK’s full-year profit to December 2022 fell to KES 828 million representing a 24.7% decrease from the KES 1.1 billion which was recorded in 2021. The decline was was largely attributable to greater expenses in the period with loan loss provision costs for instance doubling to KES 2 billion from KES 1.014 billion in 2021.
However, the bank expressed optimism in its operations this year saying they are focused on investing and growing market-leading businesses as well as expand into new strategic areas.
We are in a strong position to continue supporting our customers as reliable financial partners in order to achieve their aspirations. Our focus is to invest in and grow market-leading businesses as well as expand into new strategic areas to provide innovative and bespoke financial solutions to our customers.
NBK Managing Director George Odhiambo.
