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NBK to open 20 branches this year

NAIROBI, Kenya Jan 31 – The National Bank of Kenya (NBK) plans to open 20 new branches by the end of this year.

The local expansion is expected to cost the bank an estimated Sh6 billion as it seeks to enhance its profile in the country.

NBK Managing Director Reuben Marambii said on Wednesday the expansion was boosted by the bank\’s return to profitability after years of dormancy that saw the bank lose out to other financial institutions.

"The demand for financial services has grown.  We are targeting county headquarters where we are not represented to grow our business," Mr Marambii said.

For the nine months to September 2010, the lender\’s net profits grew by about 40 percent to Sh1.3 billion mainly attributable to increased lending.

The bank\’s accumulated losses topped Sh5.9 billion in 2002 after individuals and institutions it had extended credit defaulted serially to push the bank into the loss-making zone.

A portion of government securities held by the bank matured last year, untying additional funds for the lender.  The Treasury also converted Sh20 billion of bad debts owed to the lender by state corporations into bonds.

The National Bank of Kenya is also one of the government parastatals earmarked for privatisation.

Mr Marambii revealed that a regional expansion plan had been drawn for the bank, but said they would only venture outside once they are satisfied with their presence locally. 

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"There are many ways of doing business outside the country. Rather than being there physically and competing with the local banks, we partner with banks there as correspondence banks… that way we are not disadvantaged in any way," he said.

With the rollout of agency banking, NBK is at an advanced stage of vetting agents to present to the Central Bank for authorisation.

"It is simply a question of finishing our studies and finding out what best works for the bank," he said adding that the agency model will work in growing the bank’s presence.

At the same time, the MD said that the bank was going to issue dividends to its shareholders once the full year results are announced.

"We have said many times that this year we must give dividends. From what I have seen so far there is nothing to stop us from paying dividends," he said.

Although NBK started making profit seven years ago, periods of accumulated losses have denied shareholders the chance to earn dividends as the lender was still in a negative capital position making it unattractive to investors.

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