(Adds lending, costs, dividend)
NAIROBI, March 4 (Reuters) - Barclays Bank of Kenya's pretax profit fell 2 percent last year to 12.07 billionshillings ($119.1 million) due to increased bad debt provisions,higher costs and interest rate volatility, it said on Friday.
The bank is part of Barclays Africa, where majority ownerBarclays Plc wants to reduce its stake. Barclays saidearlier this week it would aim to sell down its 62.3 percentstake in Barclays Africa, which runs Absa in South Africa andBarclays branded banks in 13 other countries.
Barclays Kenya's chief executive Jeremy Awori said this weekBarclays' decision to sell its Africa business would not lead tojob cuts in Kenya.
Awori said on Friday the bank's efforts to diversifyrevenues by increasing lending to small and medium enterpriseshad started to pay off.
Lending in that segment rose 27 percent during the period.The bank was previously focused on lending to top firms and highnet worth individuals before changing tack last year.
But the impact of the higher lending was offset by a 26percent jump in provisions for bad debts to 1.76 billionshillings. Costs increased 7 percent to 15.62 billion shillings,Yusuf Omari, the company's finance director, said.
Total loans rose 16 percent to 145 billion shillings whilenon-interest income increased 4 percent due to the lender'sentry into insurance last year.
Kenyan banks were generally affected by an increase inlending rates by the central bank in the middle of last year,which sent commercial rates as high as 25 percent.
Barclays Kenya maintained its total dividend for the year at1.00 shillings including an interim dividend of 0.2 shillingsthat has already been paid.
($1 = 101.3500 Kenyan shillings)
(Reporting by Duncan Miriri; editing by Jane Merriman)