Kenya: KCB six months net profit rises by 28.4% to reach KSh 19.6 billion

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  • KCB Group PLC has reported a 28.4 per cent rise in its net earnings to reach KSh 19.6 billion for the six months ending June 30, 2022
  • KCB said the growth from KSh 15.3 billion was driven by improvement in both the funded and non-funded income streams
  • Group businesses increased their profit contribution to 16.8 per cent, driven by new business growth and the impact of BPR Bank

KCB Group PLC has reported a net earning of KSh 19.6 billion for the six months ending June 30, 2022, to mark a 28.4 per cent rise from last year.

The growth from KSh 15.3 billion was driven by improvement in both the funded and non-funded income streams.

Additionally, the international subsidiaries increased their overall contribution to the Group’s performance.

Total operating income increased by 16.8 per cent, mainly driven by a 29.9 per cent growth in Non- Funded Income.

Group businesses increased their profit contribution to 16.8 per cent driven by new business growth and the impact of BPR Bank.

KCB Group CEO Paul Russo said they delivered solid results, supported by their diversified business model as they sharpened their focus on customer obsession and execution to better support their customers in a rather difficult operating environment.

“Despite some uncertainties and headwinds, we saw sustained signs of recovery across the region, allowing us to deliver stronger shareholder value,” Russo said.

Interest income grew by 15.7 per cent to KSh 54.5 billion, mainly driven by a 31.5 per cent growth in income from government securities.

This was partially offset by a 30.3 per cent increase in interest expense as cost of funding marginally increased during the period. Net interest income increased by 11.5 per cent to KSh 40.6 billion.

The 29.9 per cent jump in non-funded income was driven by lending fees, and services fees – on account of increased activity, especially in trade finance and foreign exchange income.

Key to this outcome was the contribution from KCB’s digital channels which maintained a 98 per cent level of transactions by number performed outside the branches.

Mobile lending values were up 23 per cent to KSh 91 billion, while total values transacted on the mobile were up 22 per cent to 1.28 trillion.

The values transacted on internet banking and merchant/POS terminals were up 102 per cent and 50 per cent, respectively.

This performance boosted the Group NFI ratio to 32.1 per cent compared to 28.9 per cent achieved in the previous year.

KCB Group management. Photo: KCB.

Provisions decreased 34.4 per cent, largely due to a drop in corporate and digital lending impairment charges. Appropriate IFRS 9 staging in prior years had already recognised associated impairment.

Operating costs went up by 20.3 per cent on the consolidation of BPR Bank in Rwanda, increased spending on customer acquisition initiatives, investment in technology, and higher staff costs.

This increase drove up the Group cost to income ratio to 45.7 per cent. The Group is confident that once these transition-related activities are concluded, the cost-to-income ratio will reduce to below 44 per cent.

Looking at the balance sheet, total assets stood at KSh 1.21 trillion for the period, up 18.4 per cent on additional lending, deposits growth and the consolidation of BPR subsidiary. Customer loans increased by 20.2 per cent to KSh 730 billion from new disbursements across the Group, while customer deposits grew to KSh 909 billion, up by 15.6 per cent from the previous year.

Kenya: Bank visits decline as customers opt for mobile transactions

Shareholders’ funds grew by 17.1 per cent to KSh 179.1 billion on improved profitability for the period.

The Group capital buffers remained well above the regulatory requirement, with core capital as a proportion of total risk-weighted assets standing at 17.7 per cent against the statutory minimum of 10.5 per cent. Total capital to risk-weighted assets ratio was at 21.6 per cent against a regulatory minimum of 14.5 per cent.

In a related story, KCB Group Board appointed Paul Russo as the Group CEO, replacing its long-serving CEO Joshua oigara.

During the second quarter, the Group deepened its focus on scaling regional play by signing a definitive agreement with shareholders of TMB to acquire a majority stake in the Democratic Republic of Congo (DRC)-based lender.

The transaction is expected to close in the fourth quarter of 2022, subject to regulatory, shareholders and other approvals. This will see KCB acquire 85 per cent of the shares in TMB with an option to acquire the balance in due course.

Kenya: Equity posts 36% rise in half year profit supported by growth of loans

Developing story

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

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