Victoria Commercial Bank has secured a Sh1 billion five-year loan from Swedish Investment Fund for Emerging Markets (SIFEM) as it intensifies debt-funded growth.
The lender—which posted flat growth for the first half of the year at Sh300 million net profit from Sh299 million in a similar period last year—has a loan-to- deposit ratio of 92.2 per cent.
With deposits of Sh25.3 billion, the lender relies on development finance for on-lending, which has helped it grow loans 13 per cent to Sh23.4 billion from Sh20.5 in the six months to June, 2018.
“VCB has entered into a partnership with Sifem AG managed by Obviam for financial accommodation of $10 million. The five-year facility shall support growth of VCB’s lending business to micro enterprises and to further increase its customer base,” VCB says.
Through its four branches in Nairobi, Victoria Commercial, which commenced its operations in 1987, targets small and medium-sized enterprises, reached more than 800 borrowers and around 2,300 depositors in 2018.
Last year, the lender sealed a seven-year deal with another Swedish development lender for Sh502 million loan ($5 million). On April 18, 2018, Victoria Commercial Bank finalised a placement of $5 million (Sh500 million) of a subordinated tier-2 compliant loan from SwedFund, the Swedish development finance institution.
In June, during a bilateral conference between Kenya and the US, VCB inked a Sh1 billion ($10 million) loan deal with World Business Capital (WBC) in Nairobi, with the lender saying it will disburse a significant portion of the Sh1 billion for businesses owned by women.
The deal was arranged by Dubai-based corporate advisory Nimai and guaranteed by Overseas Private Investment Corporation (OPIC), the US government-owned agency which helps American private firms gain foothold in emerging markets such as Kenya.
Nimai also appointed VCB to oversee investment of its Sh1.5 billion kitty for financial technology startups in Africa and Asia. The mandate will see the rollout of the Nimai Emerging Financial Services Fund (NESF) facility seeking to benefit 1.7 million customers in Kenya, Sri Lanka, Bangladesh, Nepal, India, Ghana and Tanzania.