The new National Bank of Kenya
chief executive Wilfred Musau is counting on increased lending to small and
medium size enterprises (SMEs) to grow returns for the troubled lender and
steer it back to profitability.
The State-owned lender on Thursday
launched a dedicated business division targeting SMEs backed by a Sh2 billion
revolving fund.

“We are looking at a massive and
aggressive account opening campaign for our small enterprise banking segment
while at the same time becoming the go-to-bank for the unbanked and low-end
customers,” said Mr Musau who prior to his appointment was the bank’s director
for retail and premium banking. 

Some of the products launched under
the new unit include Jenga Chama (targeting investment groups), Jenga Kilimo
(targeting small holder farmers) and Jenga Biashara (targeting SMEs).

“We will offer the products through
our 85 branches and our mobile banking channels,” he said. Mr Musau was
appointed to the helm of the bank for a five-year term effective Monday.

He has been acting CEO of the lender
since April following the acrimonious sacking of Munir Sheikh Ahmed.

NBK is faced with tough times marked
by declining earnings, capital inadequacy, mounting bad loans, and corporate
governance queries. The bank’s net profit for the half year to June tumbled to
Sh311.2 million from Sh1.7 billion in 2015.

The volume of bad loans more than quadrupled to
Sh27.3 billion in the period under review.
On Thursday, the new executive
remained cagey about specific plans to improve fortunes. 

“(Our strategy) is
stabilisation, consolidation and moving towards our vision through various
initiatives that we have embarked on,” Mr Musau told the Business Daily,
adding that capital raising plans and efforts to unlock a rights issue
stalemate were on course.

NBK’s total capital to total
risk-weighted assets ratio stood at 13.2 per cent as at June 2016, which is 1.3
percentage points below the Central Bank of Kenya statutory minimum of 14.5 per

“The journey to capitalise the bank
is in the process for both tier one capital and tier two capital so that we can
lend much more and attain tier one bank status with regard to our balance sheet
and also tangible assets,” he said.

The capital ratio constraints have
been compounded by a three-year impasse on a planned Sh13 billion rights issue. 

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