NAIROBI, KENYA, DECEMBER 15 — S&P Global Ratings has rated KCB Bank Kenya Limited B+/B with a stable outlook affirming the lender’s solid performance credentials as the year ends.
The Agency underscored the strength of KCB Bank and its well established corporate franchise in East Africa,as well as the bank’s ability to maintain its revenue stability in the current economic environment.
The assessment that is in line with the agency’s September rating on KCB Bank, S&P said,is supported by the lender’s resilient earnings amid regulatory changes and challenging economic conditions.
Additionally, said the agency,this is as a result of the banks’ leading business position, with a strong corporate franchise, good capital earnings, good underwriting standards and historically low loan losses.
This is on top of a stable and expanding retail deposit base and a liquid balance sheet.
“Our stable outlook mirrors on Kenya and reflects our expectations that the bank’s business and financial profiles will remain broadly unchanged over the next 12 months,” S&P said.
KCB Group Chief Executive Officer and Managing Director Joshua Oigara said: “This shows the Bank’s is able to meet its commitments and is well positioned to support the customers’ financial well-being in Kenya and across all it regional subsidiaries.”
“This is a vote of confidence in the bank’s sustainability and future growth prospects,” Mr. Oigara added.
KCB Group Plc reported a net profit of Ksh18.04 billion for the nine months to September 30, 2018, representing a 20 per cent growth over the same period last year. The improved performance was primarily driven by robust cost management and growth in net interest income.
Total operating income was up by two per cent to close at Ksh54.2 billion with an improved show from non-interest income which accounted for 33 per cent of the Group’s income.
The agency however views high-risk conditions in the East African community (EAC), significant credit risk exposure due to large corporate accounts and moderate capitalization as a rating weakness.
On future outlook, S&P is confident that KCB is well positioned to maintain its leading position in Kenya over the next few years.
“We expect the bank to report are turn on equity of 22 per cent to 23 per cent through 2019. We believe its strategic partnership with Safaricom, Kenya’s largest telecom, will fuel growth of non-interest income over the coming years, and that agency banking will contribute positively toward fee income,” said the rating agency.
“At the same time, we expect net interest income will continue to account for about two-thirds of operating revenues over the same period,” S&P added.
In June, Fitch Ratings Agency assigned KCB Group Plc and KCB Bank Kenya Limited 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 KCB Bank Kenya.
KCB Group Plc is East Africa’s largest commercial Bank with operations in Tanzania,South Sudan, Uganda, Rwanda, Burundi , Ethiopia, and Kenya.
Today, the lender has the largest branch network in the region of over 260 branches, 962 ATMs and over 16,678 agents offering banking services on a 24/7 basis in East Africa.