Our aim to be the Regional
SME Bank of choice is beginning to take shape.
We have expanded our branch network
with new branches in Nakuru and Eldoret with a
further seven branches in Kenya planned for 2008.
Our license application in Uganda
has been approved and we plan to be open in Uganda
by June 2008 focusing on the SME market.
The renovation of our main branch
in Kigali is complete and an energetic new team
of SME loans officers is now beginning to make
its presence felt in the market. Our branch in
Remera is being relocated to new premises and
new branches in Gitarama and Gisenyi will be opened
in 2008.
It is clear that our strategy
is beginning to bear fruit, resulting in the Bank
in Kenya receiving the award for “Best Bank
in SME Banking” in Kenya.
This is clear testimony to the impact that our
relationship managers are
having in the market.
Group Financial Review
In 2007 our deposits grew by
16% and our loans and advances by 32% and as a
result our net interest income grew by 36%. Fee
income once again rose by 28% and foreign exchange
income by 25%. Operatin expenses rose by 25% due
to increasing staff numbers and expenses related
to our branch expansion program.
Operating profit before provisions
rose by 9% to KES 247 million. Our overall profit
was flat at KES 150 million. The bank has traditionally
followed a very strict internal policy for providing
for bad and doubtful debts and ensures that it
is in full compliance with Central Bank
Guidelines. As a result we saw quite a significant
increase in our impairment charge for 2007. The
underlying performance of our loan
portfolio is good and the charge taken was in
respect of a very small number of older relationships
which predate our SME focus.
Additional capital was injected
into our Rwandan operation to bring us up to the
new minimum requirement of RWF 5 billion (KES
575 million)
Small & Medium Enterprises
Our portfolio of small and medium
enterprises customers continues to expand. We
have however come to realize that the needs of
the small
enterprises differ from those of medium enterprises.
In view of this we have created two separate departments;
each with its own highly trained
team so that we ensure that the customers get
the highest standard of service that we can provide.
The “Medium Enterprises”
comprises of a team of 5 Relationship Managers.
The team is very customer focused and provides
a very
professional service to their clients.
The “Small Enterprises”
team now consists of 28 fully trained Relationship
Managers in the field. We bring the bank to the
customer
and our approach is much appreciated by the customers.
It is clear that we are on the right track as
the Bank was very proud to
receive the accolade of “Best Bank in SME
Banking” in Kenya in 2007.
Consumer Banking
Our branches play a very important
role in providing day to day service to all the
bank’s customers.
Customer Service is the thing
that differentiates us from our competition and
the bank has always had a good reputation for
good service. It was
very pleasing therefore to also receive the award
for “Best Bank in Customer Satisfaction”
in 2007. My heartfelt thanks go to all our staff
as
such an award cannot be won without the commitment
and dedication of all our people.
We continue to target the employees
of our SME customers with a low cost, electronic
banking service. In many cases we are bringing
these
employees into the banking system for the first
time. In addition to the transaction account just
mentioned, we also provide them with savings
and loan products.
We recognize the importance
of a good branch network which has expanded in
2007 with the addition of branches in Nakuru and
Eldoret
with a further seven branches planned in 2008.
Further branch expansion is
planned in Rwanda together with the relocation
of our Remera Branch in Kigali as we continue
to bring the
bank in Rwanda up to group standards.
Development Partners
In 2007 we were very pleased
to negotiate and receive a very flexible long
term line of credit from the European Investment
Bank. This will enable
us to offer fixed rate loans for a term of up
to 10 years to our SME clients. This is particularly
useful for expensive capital items or factory
extensions where longer term finance is required.
The ability to provide a fixed rate over the term
of the loan provides our customers with cost
certainty over the length of the project being
financed.
It is clear that our
strategy is beginning to bear fruit, resulting
in the Bank in Kenya receiving the award for
“Best Bank in SME Banking” in Kenya.
This is clear testimony to the impact that our
relationship
managers are having in the market.
Shorebank and The UK’s
Department for International Development’s
(DFID), Financial Sector Deepening (FSD) Kenya,
continue to provide
support as we refine and automate our processes.
We continue to work closely with FMO and USAID
as we grow our SME
portfolio.
Risk Management
Corporate governance is playing
an increasing part in the life of bankers and
all of us in the industry are aware of the problems
globally that some
financial institutions are experiencing.
It is clear that the understanding
and management of risk is a key part of our daily
lives. The Central Bank of Kenya continues to
issue additional
guidelines which we have already adopted, the
latest being Business Continuity Guidelines. The
timing has been quite appropriate as the early
part of 2008 saw post election violence disrupt
the operations of many businesses including banks.
The implementation of Basel
II is being considered by the Central Bank and
we have internally started our own project to
ensure we are able to
meet and implement any new regulation.
Our bank has appropriate policies
in place to cover all the major risks we face
and these have close oversight by the board of
directors.
Our KYC policies are in line with international
best practice and our compliance department undertakes
regular checks to ensure all accounts
are properly maintained.
Our Staff
Our staff has worked particularly
hard this year and their efforts have been rewarded
by the achievement of the awards previously mentioned.
We must recognize that this is very much a team
effort and whilst our relationship managers and
branch staff are the face of the bank to the
customer, they are supported by equally dedicated
people who work behind the scenes in the back
office.
The bank continues to expand
both locally and regionally, as a result our staffing
requirements increase providing opportunity for
advancement
for all our people. We seek to hire the best people
possible and our existing staff are important
ambassadors in this effort.
Conclusion
In closing let me also thank
all our customers for their support in 2007 and
reiterate our commitment to them. We truly believe
we are “Partners
in Growth and Development” and look forward
to our relationships strengthening over the coming
years.
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