UBA Kenya Bank is seeking a capital injection from its parent company in order to meet regulatory requirements as the lender posted a smaller loss of Sh306,000 due to lower costs.
Kenyan banks are expected to raise their minimum capital requirement to Sh3 billion by December and Sh10 billion by 2029, up from Sh1 billion previously.
UBA Kenya believes that its parent company, Nigeria's UBA Plc, is ready to provide additional capital to meet the Central Bank of Kenya's (CBK) phased requirements.
This information was released alongside the announcement of a smaller loss of Sh306,000 for the six months ending in June, compared to a loss of Sh248.5 million in the same period the previous year. The bank on Wednesday said it has so far broken even.
“Our current core capital stands at Sh1.49 billion. To bridge the gap, we are pursuing a capital injection from our parent company, UBA Plc,” UBA Kenya said in an e-mail response to the Business Daily . “These measures not only ensure compliance but also empower us to capitalise on emerging opportunities in Kenya’s vibrant economy.”
The CBK tightened the capital rules to protect lenders against risks and bolster them for regional expansion. It cited increased risks ranging from climate change to cybersecurity, which require stronger banks for resilience.
The move to increase capital is expected to prompt consolidation or share offers in Kenya’s banking sector, with some lenders opting to borrow from their parent companies.
Banks are required to raise their core capital to at least Sh3 billion by the end of December. This minimum will then rise to Sh5 billion by the end of 2026 and Sh7 billion by the end of 2027. It will then rise further to Sh8 billion by the end of 2028 and Sh10 billion by December 2029.
UBA Kenya Bank expects to resume aggressive lending in order to boost in-come, and analysts expect the lender to break even.
“Our strategy is focused on regional trade and payment facilitation,” said the lender. “The contraction in our net loan book from Sh2.87 billion in June 2024 to Sh792 million in June 2025 was a move to de-risk our balance sheet and position the bank for sustained profitability.”
The bank said it had focused on recovering bad debt and targeting lending to low-risk borrowers, as non-performing loans increased in Kenya due to the weak economy.
“While this impacted interest income from loans, we offset some effects through diversified revenue streams such as a 58 percent increase in foreign exchange trading income and growth in fees and commissions,” said UBA Kenya Bank.
The bank posted a gain of Sh24.5 million from its loan loss provisions, compared to a cost of Sh102.7 million in the six months to June last year.
Income from lending at UBA Kenya Bank dropped to Sh48.8 million in the six months to June, compared to Sh97.4 million in the same period a year earlier.
