NAIROBI, KENYA, AUGUST 16 — KCB Group (Plc) profit after tax for the first six months of 2018 surged to Ksh12.1 billion, the bank has reported, reinforcing the lender’s solid growth prospects.
This is a 17.5 per cent growth from Ksh10.3 billion the bank posted in half-year 2017.
KCB Group CEO and Managing Director Joshua Oigara says the lender’s business was resilient in a rough operating environment, further complicated by credit tightness in key markets.
“We are on track to delivering on our 2018 targets on the six strategic initiatives. We are seeing a more robust business that is responsive to our model of boosting non-funded activity, improving our financial strength and prudent management to consistently deliver stronger shareholder value,” said Oigara during the release of the group’s financial results in Nairobi, on Thursday.
According to the financials, total income was up three per cent to Ksh35.6 billion from Ksh34.6 billion, riding on a surge in both interest and non-interest income.
The contribution of non-funded income at 32.3 per cent of the total revenues was in line with the Group’s agenda to deliver at least 40 per cent of the income from digital financial services by the year 2020.
Comparatively, operating expenses declined 7.0 per cent to Ksh18.5 billion from Ksh19.9 billion attributable to improved staff costs and loan loss provisioning.
In line with the digital transformation strategy, transactional activity continued to shift away from branches, with non-branch transactions (mobile, agency banking, point of sale terminals and ATMs) standing at 87 per cent of total volumes, compared to 13 per cent handled at the branches.
During the period, KCB balance sheet (total assets) grew by 5.9 per cent to Ksh667.7 billion from Ksh630.6 billion, driven by higher deposits and gross customer loans in an environment of controlled interest rates.
Deposits hit Ksh525 billion from Ksh482.8 billion, a nine per cent jump, resulting in an improved liquidity position.
KCB’s loan book also expanded 3.6 per cent to Ksh421.5 billion (loans and advances to customers), from Ksh406.9 billion last year.
This comes as the group continues to focus on improving credit quality. Non-performing loans ratio improved by 130 basis points from March 2018 to settle at 8.5 per cent as at June 2018.
Shareholders’ equity grew one per cent to Ksh98.9 billion in a period largely due to impact of implementing IFRS 9 that saw a significant reduction in statutory loan loss reserves.
Retained earnings grew by Ksh12.5 billion to close at Ksh73 billion. In March, KCB obtained a US$100 million Line of Credit (LOC) from the African Development Bank (AfDB) to be used for on-lending to corporate businesses and Small and Medium Enterprises (SMEs).
READ:AfDB Signs US$100 million line with KCB bank
This facility will facilitate financial access to businesses in the areas of agriculture and renewable energy and enhance job creation.
Headroom on KCB Group Plc’s capital base remained strong and above regulatory and internal targets. The Group’s core capital as a proportion of its total risk weighted assets closed the period at 15.7 per cent representing a 520-basis point buffer on the Central Bank of Kenya statutory minimum.
Overall, the Group’s total capital as a proportion of its risk-weighted assets stood at 17.2 per cent against a regulatory target of 14.5 per cent.
During the quarter, 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 and S&P to KCB Bank Kenya.
“Looking into the second half of 2018, we foresee strong growth on an improved macroeconomic environment, especially in Kenya and expect improved investor confidence in South Sudan on the back of the newly signed peace agreement,” said Mr. Oigara.
Following the results, the board of directors has approved a payment of an interim dividend of Ksh1.00 per share.
The Nairobi headquartered lender is East Africa’s largest commercial bank with operations in Tanzania, South Sudan, Uganda, Rwanda, Burundi and Ethiopia, with a branch network in the region of over 260 branches, 962 ATMs and over 15,000 agents offering banking services on a 24/7 basis in East Africa.
