By ANNIE NJANJAMore by this AuthorThe proposed merger between NIC and Commercial Bank of Africa (CBA) is likely to lead to higher profitability for the new entity due to staff and branch rationalisation while reducing funding costs, global rating agency Moody’s says, and in the process will strengthen Kenya’s financial sector. An update from the firm’s investment service said the merged entity would also be able to inject capital into strategic growth and digital expansion more efficiently thanks to a strong capital base. “Despite integration costs in the first two years of the merger, cost synergies resulting from staff and branch rationalisation and reduced funding costs from the stronger banking franchise have the potential to support profitability,” said Moody’s on Monday. According to the agency, the merger — which it termed as credit positive for the two lenders — will also add to the small number of large, strong banks in Kenya’s over-banked sector. The merger is expected to be completed by end of September.

Source: Daily Nation February 04, 2019 19:30 UTC