KCB posts double digit mortgage growth

March 2, 2011
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, NAIROBI, Kenya, Mar 2- The Kenya Commercial Bank Group mortgage business is currently posting double digit growth thanks to the consolidation of the bank\’s operations with that of its subsidiary, Savings and Loans (S&L) Kenya in 2009.

KCB Deputy Chief Executive Group Businesses Peter Munyiri said on Wednesday that through the merger, they had managed to increase the avenues through which mortgages are offered to their customers from eight branches two years ago to the current 168.

"We are leveraging on a bigger network, more sales people and that\’s why we are growing in double digits. So in terms of reach, we have created capabilities and competitiveness in all the towns where there\’s demand for mortgage," explained the deputy CEO.
The business has also been boosted by increased capital following the successful 2010 rights issue through which the bank can lend up to Sh10billion to a single borrower.

KCB acquired S&L back in 1972 to serve as the housing finance arm and the subsidiary had been operating separately before 2009 where it had managed to capture a market share of slightly over 20 percent.

However with the consolidation, the group plans to play a greater role in the properties market by leveraging on its financial muscle and the 203-branch network.

Currently, at Sh22billion, the bank commands 35 percent of the total mortgage book in the market and expects to double that figure in the next eight months.

"We have a huge approved, un-drawn book which is going through the security perfection process which is part of the hindrance why we have not been able to put in another Sh3billion-Sh4billion since the year begun," Mr Munyiri told Capital Business.

Currently the country has the third largest mortgage market in sub-Saharan Africa after South Africa and Namibia, accounting for 2.5 percent of GDP.

Mortgages are still inaccessible to a majority of Kenya with a new World Bank survey showing that there are only a meagre 15,049 mortgage loan accounts in the country. The report cited lack of access to long term funding and the low levels of incomes as some of the major impediments to the uptake of mortgages.

However, Mr Munyiri argued that the problem in Kenya was largely due to the high demand for mortgages which way outstrip the supply.

This challenge, he said calls for partnerships to be developed between the public and the private sectors.

In the meantime however, the bank has cast its net in the region where it hopes to tap into the huge opportunities presented by neighbouring countries such as Rwanda, Uganda and Sudan.

Terming them as the \’next frontiers\’, Mr Munyiri disclosed that they had recruited mortgage teams in Uganda and Rwanda as they seek to further grow their mortgage book.

"We are exporting our capabilities in those markets. These are good markets and the uptake of the product is good because these economies are growing well, there is a huge middle class and so is demand," he said of the factors that make these countries attractive.

The deputy CEO spoke when they hosted their developers\’ club members where the bank also launched a mortgage portal, www.kcbpropertyguide.com through which it will provide update information to customers and real estate players on the regional scene.

"In response to market demand, KCB is always innovating and developing new ideas of how we can deepen relationships with the Kenyan and indeed regional property players", the deputy manager said of the site that will also be of importance to potential home owners residing abroad.

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