Barclays Bank of Kenya is shifting its focus from large corporate clients to small businesses as it seeks to jumpstart its slowing profits and grow it at double digit rates like most of its local rivals, Reuters reported.
The bank, which was one of the largest in the country for decade, said it has allocated about $300 million to lending to small and mid-sized enterprises (SME) in its 2015/16 fiscal year in the largest East African economy.
Kenyan has seen increased growth in SME that have contributed largely to the ballooning of the local economy over recent years. SME have helped banks such as Equity Group and KCB Group post double digit growth, while Barclays, a more corporate-focused lender posted single digit growth over the same period.
In the latest half-year results, Barclays posted a 5 percent rise in profits, while Equity and KCB posted 12 percent and 13 percent respectively, a clear indication that despite the risks the fast-growing SME segment of the market has, it is offering better returns than lending to corporate.
“(Barclays) first half loan growth was very anemic and far behind its peer group. It speaks to a very defensive game,” Aly Khan Satchu, an independent analyst at Rich Management, told Reuters.
Barclays Kenya Chief Executive, Jeremy Awori, said the lender was now shifting its focus to small business borrowers by creating a dedicated SME business unit and relaxing lending requirements for such businesses.
“We can lend you 15 million (shillings) without you bringing audited financial statements. That has been a challenge for small businesses,” Awori told an investor briefing last week. “We know SME is going to the bed rock of driving this economy.”
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Originally posted 2015-08-20 15:12:33.