Stanbic Holdings has signed a $40 million (Sh5.2 billion) long-term loan from German fund DEG to supplement the capital of its lending subsidiaries.
Mr Joshua Oigara, chief executive of Stanbic Bank Kenya and South Sudan, said in an interview that the deal is awaiting Central Bank of Kenya (CBK) clearance and will be formally announced in the coming weeks.
“We have signed the agreement. We are just waiting for clearance from the CBK. We expect that to happen in a couple of weeks….What that does is to unlock our tier I equity for more lending,” said Mr Oigara.
Tier II capital is also called supplementary capital and is the second layer of capital that a bank must keep as part of its required reserves. It supplements tier I or core capital.
Stanbic Holdings closed June 2024 with borrowings of Sh10.48 billion compared to Sh12.71 billion at the end of December last year. Its interest paid on borrowings was Sh532.76 million in the six-month period.
The latest loan is double the nine-year $20 million (Sh2.59 billion) subordinate debt that DEG, a subsidiary of KfW Group, lent to Stanbic Holdings in January 2019.
Other two long-term borrowings in Stanbic’s books as at end of December last year are $30 million (Sh3.87 billion) obtained from its parent firm, Standard Bank of South Africa, in 2022 and another $30 million tapped from the same institution in 2018.
Stanbic Bank Kenya closed December last year with tier II capital of Sh14.09 billion, having grown from Sh10.14 billion it held in the previous year.
Stanbic is big on corporate banking but has been increasing its focus on areas such as retail banking and lending to groups like women and youth to power their businesses in agriculture, logistics, education, trade and manufacturing.
The group’s loan book jumped by 28.4 percent to Sh361.4 billion at the end of June 2024 compared with Sh281.4 billion in a similar period last year.
“The real growth engine for us is on the entrepreneurs and the small and medium enterprises. That is where more facilities will be targeted to support them in growing their businesses,” said Mr Oigara.
Stanbic Holdings on Thursday announced that its net profit for the half year ended June 2024 had grown by 2.3 percent to Sh7.21 billion, even as it raised its interim dividend by 60 percent to Sh1.84 per share.
The interim distribution, set for next month, will amount to Sh727.4 million and is a growth from Sh1.15 per share or a total of Sh454.62 million that the group distributed on the performance of a similar period last year.
The lender will pay the dividend on or about September 27 to investors who will be in the company’s share register as at the end of September 2.
