KENYA – KCB Group is planning to provide an additional capital injection of US$27.3 million to its subsidiary National Bank of Kenya (NBK) in the coming days, with the cash going to help the subsidiary comply with minimum capital requirements.

National Bank of Kenya has continued to breach statutory capital levels despite receiving the initial capital support of US$45.5 million from KCB in December 2019. T

The breaches have constrained National Bank’s capacity to take more deposits and expand its loan book.

“We will put US$27.3 million [into NBK] before the end of this month,” KCB’s chief financial officer Lawrence Kimathi told Business Daily.

KCB had planned to provide the additional capital last year but delayed.

“We will put US$27.3 million into NBK before the end of this month”

Lawrence Kimathi – Chief Financial Officer, KCB

The Chief Financial Officer said that NBK’s capital levels will be further supplemented by the subsidiary’s own cash flows and recovery of non-performing loans over the next few months.

NBK’s core capital to total risk weighted assets stood at 8.7 percent in the year ended December, 1.8 percentage points below Kenya’s statutory minimum of 10.5 percent.

Total capital to total risk weighted assets was 10.3 percent against the set threshold of 14.5 percent, a gap of 4.2 percentage points.

The lender’s core capital to total deposit ratio stood at 6.2 percent, trailing the minimum requirement of eight percent by 1.8 percentage points.

National Bank reported a net profit of US$1.62 million in the year ended December 2020, reversing a net loss of US$3.1 million a year earlier.

Recapitalisation of NBK and KCB’’s impending purchase of two banks in Tanzania and Rwanda for US$40 million from Atlas Mara are what prompted KCB to cut its dividend pay-out.

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