Stanchart gets nod for Sh3 billion rights issue
By JACKSON OKOTH | May 25th 2012
By JACKSON OKOTH
Standard Chartered Bank has indicated that cost of credit could remain high, at least for the next six months. This is until there is a substantial drop in cost of living, which remains high due to expensive food and fuel.
“Inflation figures are not encouraging. While we expected current rains to trigger a drop in food prices, this has not happened.
The Central Bank could therefore keep its rate at current levels for the next six to nine months,” warned Richard Etemesi, chief executive- Standard Charted Bank.
He made these remarks Thursday while addressing shareholders during the bank’s Annual General Meeting (AGM) at a Nairobi hotel.
Shareholders approved a rights issue that aims at raising Sh3.2 billion to support a growing balance sheet and anticipated business growth between this year and 2015.
“We shall use some of these funds to increase customer assets, recruit more staff, increase loans and advance portfolio and refurbish some of our branches,” said Etemesi.
The bank says uncertainty around the political process and elections will continue to act as a drag on business confidence while a forceful parliament with a populist agenda could also be detrimental to the economy.
In recent weeks, the shilling has been under pressure raising fears that the experience of last year when it hit a historic low of Sh107 to the US dollar, could recur.
“A widening current account deficit is putting pressure on the shilling. There has also been an outflow of foreign currency as investors shift from falling Treasury Bills to higher yielding instruments,” said Etemesi.
In the last few days, CBK has pumped over $100 million (Sh8.4 billion) to the local forex market in a bid to support the local unit.
There are concerns that adverse weather condition, including floods in part of the country in recent months, could affect agricultural production.
Persistence in the Euro Zone crisis, volatile international crude oil prices and a widening current account deficit together upcoming election politics expected to be keep drivers of the economic outlook this year, says the bank.
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