CENTRAL BANK OF KENYA
Remarks by
PROF. NJUGUNA NDUNG’U
GOVERNOR
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Thursday, June 17, 2010

The Chairman and Board Members;
Group Chief Operating Officer;
Management and Staff;
Distinguished Guests;
Ladies and Gentlemen:
It gives me great pleasure to be with you today at the official opening of Fina
Bank’s, Ngong Road Branch. As the regulator for the Banking Sector, the Central
Bank is pleased to be associated with the achievements of the banks we regulate,
particularly where these developments lead to increased access to banking services
for the Kenyan public. This is what Fina Bank is doing this evening.
It is evident that Fina Bank is focused on its programme of expansion and growth
strategy, having started its operations as Finance Institution of Africa in 1986
before converting to the present day Fina Bank in 1996. With the opening of this
branch, the bank will have a network of 14 branches in the country. I also note that
the bank has established its presence regionally by opening subsidiaries in Uganda
and Rwanda. This is encouraging indeed.
Mr. Chairman, let me take this opportunity to compliment the Board,
Management and Staff of Fina Bank for this great achievement. I note that as at
April 2010, the bank commanded an impressive asset portfolio of Ksh.13.5 billion
and customer deposits of Ksh.11.5 billion, while riding on a capital base of Ksh.1.3
billion. The Central Bank is particularly encouraged by the bank’s leading role as a
lender in the Small and Medium Enterprise (SME) sector, a growth sector in
Kenya’s economy which has been described as the ‘jewel’ of Kenya’s economic
growth.
This is indeed important following from the Budget proposals that created a
revolving fund for SME – It may well be the best policy in our times to support the
growth pole provided by SMEs.

Ladies and Gentlemen, Kenya's growth picked up in the last quarter of 2009,
extending into 2010 and on the back of good rainfall and a resurgence of tourism,
we are optimistic that this positive trend will continue, and therefore forecast that
the economy will post a 4 to 5 percent growth in 2010 on average.
Equally the banks have had a spectacular performance. For the period ended
March 31, 2010, the Kenyan Banking sector registered an increase in asset base
largely supported by growth in deposits. Assets increased by 20.8 percent to stand
at Ksh.1.5 trillion while deposits increased by 22.8 percent to Ksh.1.1 trillion. This
growth is by and large attributed to the growth of our economy that increases
opportunities for investment and demand for credit.
The Central Bank is pleased to note that the banking sector has put up strategies
that support and stimulate the economy and responded positively to the
successive reduction of the Central Bank Rate and Cash Reserve Ratio. While it is
noteworthy and encouraging for banks to post healthy profits, this should also go
in tandem with the reduction of lending rates to stimulate private sector
borrowing and financing of investments, working capital as well as reducing the
risks of default. At this juncture I want to register my compliments to Fina Bank
for having reduced its base lending rate to 14.75 percent. I am sure there is room
to do more. The continued lowering of base lending rates by commercial banks
will not only stimulate our economy but also reduce non-performing loans in the
industry. However, lending rates reduces the risk of default.
Ladies and Gentlemen, The Central Bank will endeavour to pursue prudent
policies that foster financial stability, increase financial inclusion and improve
financial efficiency. Let me at this juncture highlight two policy issues that are at
the heart of the of financial inclusion;
• Agent Banking Model: An amendment to the Banking Act through the
Finance Act 2009 has enabled the banking industry embrace agent banking.
Agent banking will permit banks to contract third parties to provide certain
banking services on their behalf without having to put up brick and mortar.
This model will therefore increase financial inclusion to the majority of the

unbanked Kenyans at an affordable cost to both the bank and the customer.
The Central Bank is pleased by the level of interest and financial innovation the
model has generated.
• Credit Reference Bureaus: To ensure the growth of credit lending at
affordable and sustainable rates, the Central Bank has licensed the first Credit
Reference Bureau (CRB) and a few more are in the pipeline. A robust
credit information apparatus will enable the banking industry share critical
customer information that will lead to lowering the credit risk in the industry
and hence the lowering of lending rates in the banking industry. This policy
aims at building information capital that will allow the credit market to
function properly and efficiently and change the collateral technology and
reduce the cost of collateralization.
The Central Bank of Kenya will continue to pursue policies that drive financial
innovation, build strong banks and partnerships in the banking industry to ensure
a stable financial sector in the country. Strong banks can weather shocks more
easily. Strong banks will support economic growth.
Ladies and Gentlemen, I wish to conclude by congratulating Fina Bank for
opening the Ngong Road Branch and to assure the Board and Management of Fina
Bank of the Central Bank’s support in your growth initiatives and progression.
With these few remarks Ladies and Gentlemen, it is now my honour and
pleasure to declare Fina Bank – Ngong Road Branch – officially open.
Thank You and God bless you all.