The Kenya Commercial Bank (KCB) ratings of B+/B in the long and short-term reinforce the lender’s market position with S&P Global Ratings affirming the lender’s outlook.
This affirmation further upholds the stable outlook for the bank with S&P adding that the ratings are supported by KCB’s resilient earnings amid regulatory changes in Kenya and challenging economic conditions.
“We believe that bank, notably its earnings position, is well positioned to withstand regulatory headwinds in Kenya and challenging economic conditions in some East African countries where the group operates,” the rating agency said in its latest update.
The lender’s operations are concentrated in Kenya and the bank has a regional presence across the East African region— Burundi, Rwanda, South Sudan, Tanzania, Uganda and a representative office in Ethiopia.
“The stable outlook on KCB mirrors that on Kenya (B+/Stable/B) and S&P expects that the bank’s business and financial profiles will remain broadly unchanged over the next 12 months,” said S&P adding that the agency considers KCB to be of high systemic importance in Kenya.
KCB Group Chief Executive Officer and Managing Director Joshua Oigara said the Bank’s outlook reflects the Bank’s ability to meet its financial commitment and is well positioned to support the customer’s financial well-being in a challenging operating and regulatory environment.
“The rating is significant for the bank and we remain committed to improving our competitive position in key products and services across the region. I believe we are well positioned for growth and that innovation is a huge opportunity for us,” said Oigara.
“We continue focusing on improving credit quality, improving our financial profile and strengthening the risk management capabilities to improve on overall performance,” he added.
The rating agency expects non-performing loans to improve gradually, stabilizing at around 8%, while credit losses will normalize between 1.3% and 1.5% over the next two to three years.
KCB Group Plc profit after tax for the first six months of 2018 surged to Sh12.1 billion representing 18% growth and reinforcing the lender’s solid growth prospects.
According to the financials, total income was up 3% to Sh35.6 billion from Sh34.6 billion, riding on a surge in both interest and non-interest income. The contribution of non-funded income at 32.3% of the total revenues was in line with the Group’s agenda to deliver at least 40% of the income from digital financial services by the year 2020.
During the second quarter of 2018, Fitch Ratings Agency assigned the Group Plc and the bank long-term issuer ratings of B+ with stable outlooks, both in line with the Sovereign rating.
These ratings mirror those assigned by Moody’s to the lender.