BY TNLM REPORTER
Following last year’s General Election, the first under the country’s new constitutional dispensation, various sectors of the economy underwent major reforms, leading to a more robust and business-friendly environment.
In response to these changes, businesses have identified new opportunities to take advantage of the new landscape to grow their values and market shares.
One such business is the African Banking Corporation (ABC Bank), which has strategically aligned its operations within the financial market in a bid to shore up its margins and market share.
The bank released a Sh650-million private bond in May last year with a green-shoe option of Sh350 million to raise its total long-term lending portfolio due to a significant pent-up demand, and to support its growth strategies, including solidifying and securing its leading position in the small and medium enterprises segment. The bond was oversubscribed by 57 per cent.
“The bond issue has enabled us provide longer term credit to our SME clients. It will also boost the bank’s capital structure to enable us proactively manage Central Bank’s capital adequacy ratio requirements in 2015,” says the institution’s Group Managing Director Shamaz Savani.
Looking ahead into 2015, Shamaz says they plan to raise more capital through various vehicles to support their expansion strategy.
“We plan to open two new branches in Nairobi to cater for our increasing number of customers. We will also continue to reinforce our Diaspora Banking strategy to reach new frontiers,’’ Shamaz notes.
The MD says ABC will continue investing in innovation, brand building, human capital development, as well as pursuing more public-private partnerships (PPPs).
Shamaz further says they are facing 2015 with a strong desire to serve their customers even better, driven by their sound footing as affirmed by various organisations.
For instance, in November last year, Global Credit Rating Company endorsed the national scale long term rating assigned to ABC Bank of BBB (KE), and upgraded the national scale short term rating to A2 (KE) from the previous rating A3 (KE). The ratings are valid until October this year.
Gain foothold
The new ratings are supported by the bank’s moderate business and financial risk profile, business growth, efficiency in balance sheet, commencement of non-performing loans recovery, cost control as well as success in the private bond issue.
Shamaz says the favourable rating assures investors of the fundamentals of the business, its actual strength, financial standing and management soundness.
In an effort to gain a foothold in the market, the bank has signed key partnerships with other institutions this year to enable it leverage on its experience of three decades in the financial sector, and the synergy of its partners to increase its touch points for more customers to access its services more conveniently.
The bank launched a partnership with Kirinyaga-based Fortune Sacco in February, and Postbank in June, to enable the two institutions overcome a regulatory hurdle that limits saccos and micro-finance institutions from offering certain products such as cheque books, and trade finance facilities such as performance and bid bonds, which are needed to participate in government procurement.
The Postbank deal also included an agent-banking arrangement, in which ABC Bank would utilise Postbank’s branch network countywide to offer its customers normal banking services such as cash deposits and withdrawals, as well as balance enquiries.
‘‘We view saccos and microfinance institutions not as competitors, but as partners; it is the reason we entered into these partnerships.
We are partners working together to ensure all parties meet the demands of their customers and optimise their input in the economy,’’ says Shamaz.
Based on its solid performance, the bank has been recognised by various benchmarking institutions in different facets of business. It emerged second in the Internet Banking category during the Banking Awards organized by Think Business Ltd in April, something Shamaz attributes to investment in continuous innovation.
The bank also scooped two awards in the Champions of Governance in November – first runner up in the Finance and Investments category, and first runner-up overall.
“We believe well-governed companies carry lower financial and non-financial risks and generate higher shareholder returns,” says Shamaz. A recent independent survey by Infotrack Harris rated ABC Bank as the best in customer satisfaction among its tier three peers.
This year, ABC Bank upgraded its internet banking platform to the globally acknowledged 2nd Level Authentication, which is a superior feature that ensures the security of customer transactions. Other money transfer services the bank has introduced include a US Dollar debit card, an Account-to-Mpesa (B2C) service in conjunction with Safaricom, and more recently, Airtel Money services.
Diaspora banking is an emerging market that has caught the local banking sector by storm, with financial institutions angling for the lucrative Diaspora remittances. ABC Bank has aggressively established its footprint through agents in the UK, Americas and the UAE to cater for the growing number of Kenyans living and working abroad.
As a socially responsible organisation, ABC Bank invests in corporate social responsibility. Its flagship CSR initiative, the ABC Bank Baringo Half Marathon, is an annual sporting event held in November in Kabarnet, Baringo County. The bank this year doubled the sponsorship to Sh10 million and increased the prize kitty.
“The future looks bright,” concludes Shamaz.
Email your news TIPS to Editor@nairobilawmonthly.com, and to advertise with us, call +254715061658 anytime of the day
