KCB Group Plc profit after tax surged six per cent to Ksh19.2 billion ($186.1million) for the nine months ending September 2019, on the back of significant growth in the loan book and non-funded income.
The net earnings increased from Ksh18 billion ($176.3million), a similar period last year, driven by cost management initiatives across all businesses, said KCB Group CEO and Managing Director, Joshua Oigara, on Wednesday while releasing the results.
“We had a strong quarter and the business witnessed growth across various segments. We made continued strong investments in our capabilities to serve customers better,” Oigara said.
“The international businesses have continued to improve while our digital offerings are witnessing increased activity, giving the business impetus to continue growing,” Oigara added, “Going forward, we are emphasizing on driving a more sustainable growth, excellent customer experience and diversification.”
Total income was up 10 per cent from Ksh54.2 billion to Ksh 59.7 billion, with non-funded income increasing 16.9 per cent attributable to the digital proposition, largely KCB M-Pesa. Loans disbursed under this platform improved from Ksh 23 billion last year to Ksh98 billion.
Net interest income expanded seven per cent to Ksh38.7 billion from Ksh 36.3 billion primarily due to a growth in loan book and reduced cost of funds.
The loan book closed at KShs. 486.4 billion from KShs. 435.3 billion, an improvement of 12%, reflecting the strong lending pipeline primarily driven by retail and corporate banking customer segment.
Fees and commissions increased by 28 per cent to Ksh14.1 billion on diversified income streams with enhanced investments in digital channels.
Year-on-year, total pre-provision operating expenses were down one per cent from Ksh26.8 billion to Ksh26.6 billion due to cost efficiency measures.
“Provisions for impairment increased to Ksh5.8 billion due to the increase in non-performing loans to total loan ratio which stood at 8.3 per cent; well below the industry average of 12.6 per cent,” the lender notes in its financial report.
The Group’s balance sheet expanded by 12 per cent to Ksh764.3 billion from Ksh684.2 billion, with deposits up by 11 per cent to Ksh586.7 billion, “supported by continued strong growth in personal and transaction accounts and underpinning the bank’s focus on providing superior customer service.”
KCB Group maintained a strong capital base well within both internal and regulatory limits. The core capital as a proportion of total risk weighted assets closed the period at 18.1 per cent against the Central Bank of Kenya (CBK) statutory minimum of 10.5 per cent.
Total capital to risk-weighted assets stood at 19.5 per cent against a regulatory minimum of 14.5 per cent.
Despite a tough operating environment in the countries KCB operates in, the international business (excluding the Kenya subsidiary) posted improved performance.
The combined after-tax profit increased eight per cent to Ksh1.3 billion. Other than the Ugandan business, the rest of the four banking subsidiaries returned a profit, management affirmed.
This sustained overall growth story has seen the Group maintain its market leadership position.
In September, KCB Group Plc was ranked at position 717 in The Banker’s Top 1000 World Banks ranking for 2019, climbing nearly 100 places up, on the back of steady growth and strong balance sheet credentials.
The improvement from position 809 last year has also seen the Bank emerge 21 in Africa and number one in Eastern Africa.
KCB was Africa’s highest mover in the ranking, which tracks the health and wealth of the global banking sector, reaffirming the Bank’s credentials assigned by global rating agencies.
In its latest review, rating firm S&P Global Ratings affirmed its ‘B+/B’ long- and short-term issuer credit ratings on KCB, with a stable outlook.
S&P said the Bank is well placed to maintain its revenue stability in the current economic environment, reflecting the country’s relatively well-diversified economic base and strong private sector.
The acquisition of National Bank of Kenya (NBK) is expected to further cement KCB’s position in the domestic banking sector and strengthens its ability to access more business flows.
On November 1, NBK announced profits before tax of Ksh675 million shillings for the period ended September 30, 2019, representing a 45 per cent growth from a similar period in 2018.
KCB Group Plc is East Africa’s largest commercial Bank that was established in 1896 in Kenya.
Over the years, the Bank has grown and spread its wings into Tanzania, South Sudan, Uganda, Rwanda, Burundi and Ethiopia (Rep).
Further to the banking businesses in these markets, KCB Group has added to its Kenyan banking subsidiaries National Bank of Kenya, a listed lender.
Today KCB Group Plc has the largest branch network in the region with 330 branches, 1,076 ATMs and over 18,818 merchants and agents offering banking services on a 24/7 basis in East Africa.
Additionally, KCB Group owns KCB Insurance Agency, KCB Capital Limited, KCB Foundation and Kencom House Limited as non-banking businesses.
This is complemented by mobile banking and internet banking services with a 24hour contact center services for our customers to get in touch with the Bank.
The Bank has a wide network of correspondent relationships totaling over 200 banks across the globe and our customers are assured of a seamless facilitation of their international trade requirements wherever they are.