UBA Lender's Kenyan arm gets 1 billion shillings capital injection from Nigerian parent company

UBA Kenya, which only just posted profit for the first time since it began operations in Kenya seven years ago, increased its core capital from 1.1 billion shillings to 2.1 billion shillings with the new injection.

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UBA Building play

UBA Building

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United Bank of Africa's (UBA) Kenyan arm has announced that it has received a one billion shilling capital injection from its Nigerian parent company to aid its ambitions of booking large loans.

UBA Kenya, which only just posted profit for the first time since it began operations in Kenya seven years ago, increased its core capital from 1.1 billion shillings to 2.1 billion shillings with the new injection.

We gave changed our strategy to push corporate banking and for that we need capital to sell huge loans,” the bank said, according to a Business Daily report.

UBA Chairman, Tony Elumelu play

UBA Chairman, Tony Elumelu

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In Kenya, banks are not allowed to lend more than 25 percent of their core capital to one borrower at any given time.

UBA has the highest capital adequacy and liquidity ratios in the Kenyan market which signifies the bank's idle capacity. Its core capital to deposits ratio stands at 98.9 percent against the required 10.5 percent.

ALSO READ: Meet UBA's new group GMD/CEO as he resumes office

The Tony Elumelu-led bank has a loan to book ratio of 43 per cent compared to the required 10.5 per cent. Such high capital ratios means the bank has room to mobilise deposits and grow its loan book.

The bank had previously disclosed that its small capital base had resulted in it having to push loans worth more than 40 billion shillings from the Kenyan market into the group balance sheet to avoid falling short of regulations in Kenya.

Its liquidity ratio stood at 58.6 per cent compared to the required minimum statutory level of 20 per cent.

Kennedy Uzoka as been appointed as the new GMD of the UBA Group play

Kennedy Uzoka as been appointed as the new GMD of the UBA Group

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The bank has accumulated losses of 1.4 billion in its time in Kenya and that has eaten into its core capital position leaving it just marginally above the required 1 billion shilling core capital point.

UBA's core business declined in the three months leading June with deposits made in its coffers dropping by 900 million shillings and its loan book dropping to 300 million shillings.

The banks profitable turn comes with the appointment of its first Kenyan CEO Isaac Mwigwe, who was hired to lead the banks operations in Kenya in November 2014.

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