KCB Group’s third quarter net profit hits KSh 25b

  • KCB Group’s net profit reached KShs.25.2 billion riven by higher income and reduced provisions 
  • The group’s directors approved an interim dividend of KShs.1.00 for every ordinary share of KShs.1.00 held
  • Customer deposits stood at KShs.859 billion, an 11% jump largely due to organic growth in Kenya

Regional banker KCB Group Plc has more than doubled its profit after tax for the nine months ending
September 2021.

The bank’s net profit stood at KShs.25.2 billion from KShs.10.9 billion a year ago, marking a 131% jump, driven by higher income and reduced provisions as recovery from the COVID-19 pandemic accelerated in quarter three.

Commenting on results, the bank’s Group Managing Director and CEO Joshua Oigara said this is the strongest quarter for the company since the COVID-19 pandemic struck 20 months ago, with clear signs of economic recovery across key sectors.

“While we are cautiously optimistic of the prospects, especially due to the dynamic nature of the
healthcare crisis, we project that the worst is behind us,” he said.

“Our focus was on cost management, cash preservation and driving sustainable business growth. Our resolve to support our customers to navigate the crisis has helped them pick up from the subdued business environment,” he added.

Following the release of the results, the group’s directors approved an interim dividend of KShs.1.00 for every ordinary share of KShs.1.00 held.

The bank said the dividend will be paid on or about Friday, January 14, 2022, to shareholders on the register at the close of business on Thursday, December 9, 2021.

KCB’s net profit for half year 2021 doubles

Income Growth

During the period, the Group recorded a 16% rise in total income to KShs.79.9 billion, on account of higher interest income—driven by an increase in earning assets—, higher non-interest income – driven by increased transactional volumes and FX income and lower cost of funding.

Cost Management

At KShs.34.7 billion during the period, expenses rose by 9% on account of increased staff costs partially offset by a decrease in other operating expenses as the Group rolled out cost management initiatives to ring-fence the business from the impact of the pandemic.

Loan Provisions & Asset Quality

During the period, the cost of risk improved to 200 bps driven by reduced provisions in corporate and digital loans, while the ratio of non-performing loans (NPL) decreased from 15.1% to 13.7%.

Provisions were 53% lower to end the period at KShs.9.3 billion from KShs.20 billion a similar period last year.

The stock of NPL rose marginally to KShs.98.1 billion, from KShs.97 billion posted the same period last year mainly from KCB Bank Kenya and partially offset by a reduction in National Bank of Kenya, KCB Bank Rwanda, and KCB Bank Tanzania stock.

Balance Sheet

Total assets increased by 15% to KShs.1.12 trillion, driven by organic growth across their businesses and the acquisition of Banque Populaire du Rwanda (BPR) in Rwanda.

Customer deposits stood at KShs.859 billion, an 11% jump largely due to organic growth in Kenya while gross loans rose 12% to KShs.718 billion on account of improved lending in Kenya, Uganda, and Rwanda.

Shareholders’ equity grew 20% from KShs.136 billion to KShs.163 billion on improved profit for the period.

During the period, the group’s key capital ratios were well above the minimum regulatory requirement, giving the bank a strong headroom for growth.

Total capital stood at KShs.173.5 billion, representing a total capital to risk-weighted assets ratio of 20.6% against a regulatory minimum of 14.5%.

The Group’s core capital as a proportion of total risk-weighted assets closed the period at 17.3% against the Central Bank of Kenya statutory minimum of 10.5%.

KCB Group Plc Profit after Tax has hit KSh 25 billion, marking a 131% growth was mainly driven by increase in total income and decline in the provisions charge amid the pandemic / KCB Group

Outlook and Group Strategy

The group said it has entered the last quarter of the second year of its three-year Beyond Banking Strategy with more optimism. The strategy is anchored on delivering the very best in customer experience and driving a digital future.

“In anticipation of a stronger 2022 and a more sustained recovery, we are deepening our focus on supporting various sectors of the economy such as MSMEs as we walk with our customers to regain the lost foothold due to the COVID-19 crisis,” said Oigara.

“We are making strategic investments to deepen our regional play while building a sustainable business for the future that is anchored on people, planet and profits,” he added.

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Wanjiku Njuguna is a Kenyan-based business reporter with experience of more than eight years.

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