Since the last General Election in March 2013, the first under the country’s new constitutional dispensation various sectors of the economy have undergone 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 environment to grow their value and market share. One of these businesses is the ABC Bank, which has aggressively and strategically aligned its operations with the financial market in a bid to shore up its margins and market share.
The bank released a Ksh. 650 million private bond in May this year with a green shoe option of Ksh. 350 million to raise the total long-term lending portfolio due to a significant pent-up demand and support its growth strategies including solidifying and securing its leading position in the small and medium enterprises (SME) segment. The bond was oversubscribed by 57 per cent.
“The bond issue has enabled us provide longer term credit to our SME clients and will also boost the bank’s capital structure to enable us proactively manage capital adequacy ratio requirements in 2015’’, noted ABC Bank Group MD Shamaz Savani.
Looking ahead into 2015, Mr Shamaz said 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,’’ Mr. Savani hinted.
He said the bank will continue to invest in innovation, brand building, human capital development and pursuing more Public Private Partnerships (PPPs). He added that they are facing the New Year with a desire to serving their customers even better driven by their sound footing as reaffirmed by various organisations.
For instance, in November 2014 Global Credit Rating Company affirmed 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 previous rating A3 (KE). The ratings are valid until October 2015.
The new ratings are supported by the bank’s moderate business and financial risk profile, growth in business, efficiency in balance sheet, commencement of non-performing loans recovery, cost control as well as success in the private bond issue.
According to Mr. Savani, the favourable rating assures investors of the fundamentals of the business, its actual strength, financial standing, and management details, giving them the confidence in considering investing in the bank.
In an effort to foothold in the market, the bank signed key partnerships with other institutions this year to enable it leverage on its experience of 30 years in the financial sector, and the synergy of its partners to increase it 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, trade finance facilities such as performance and bid bonds, which are requirements for participation in government procurement.
The Postbank deal also included an Agent Banking arrangement, in which ABC Bank would utilize Postbank’s branch network countywide to offer its customers normal banking services such as cash deposits and withdrawals, and balance enquiry.
‘‘We view Saccos and microfinance institutions not as competitors, but as partners, hence the reason we entered into these partnerships. We are partners working together to ensure all parties meet the demands of their customers and optimize their input in the economy,’’ said Savani.
The bank has been recognised by various benchmarking institutions for its good performance in different facets of business. It emerged second in the Internet Banking category during the Banking Awards organized by Think Business Ltd in April. The bank attributes this to its investment in continuous innovation.
It also scooped two awards in the Champions of Governance in November- 1st Runners Up in the Finance and Investments category, as well as 1st Runners Up, Overall.
“We believe well-governed companies carry lower financial and non-financial risks and generate higher shareholder returns. They also have better access to external finance and reduce systemic risks due to corporate crises”, said Mr. Savani. A recent independent survey by Infortrack 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 security feature that shields customers from fraudsters. 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 a 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 organization, 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 Ksh. 10 m and increased the prize kitty.