NAIROBI, KENYA, NOVEMBER 14 — Regional lender KCB Group has reported a Ksh18.04 billion net profit for the nine months to September 30, representing a 19.2 per cent growth from Ksh15.1 billion recorded in a similar period last year.
The Nairobi Securities Exchange listed lender’s growth has been buoyed by increased earnings across revenue streams and effective cost management.
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.
Interest income grew 5.1 per cent to close at Ksh49.2 billion up from Ksh46.8 billion as its loan book expanded by four per cent to Ksh435.3 billion, from Ksh419.5 billion last year.
During the period, total customer deposits for the lender which has presence in all the East Africa countries including Ethiopia, increased to Ksh526.8 billion. This is a six per cent growth from Ksh496.3 billion the group had in a similar period last year.
This is an indication of the value customers attach to the Bank, supporting the healthy liquidity position of 33.7 per cent.
Non-branch transactions have continued to grow and now stand at 87 per cent of total volumes, compared to 13 per cent handled at the branches.
Agency banking transactions grew by 74 per cent , Mobile banking was up by 34 per cent , with ATM and Point Of Sale transactions increasing by 36 per cent and 16 per cent respectively.
KCB Group has been investing in technology to simplify customer journey and enrich its customer’s experience. The Group saw total operating expenses decline by Ksh2.1 billion driven by lower staff costs and loan loss provisioning.
“Our focus on technology driven growth continues to deliver both client satisfaction and efficiencies while keeping costs under control and diversifying the income streams,” Group CEO and MD Joshua Oigara said on Wednesday when the bank announced its results.
According to the financials, the Group’s balance sheet improved by 6.0 per cent to Ksh684.2 billion from Ksh643.8 billion in 2017.
During the period under review, long term funding stood at Ksh20.7 billion from the previous period’s Ksh14.4 billion.
In the first quarter of this year, 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).
The asset quality improved for the second straight quarter with Non-Performing Loans ratio closing at 7.5 per cent and post IFRS 9 implementation coverage ratio increasing from 41.5 per cent to 80.8 per cent.
For the nine months, KCB maintained a steady capital base—within both internal and regulatory limits— central to business growth in the coming years.
The Group’s core capital as a proportion of its total risk weighted assets closed the period at 16.3 per cent against the Central Bank of Kenya statutory minimum of 10.5 per cent .
Total capital to risk-weighted assets stood at 17.8 per cent against a regulatory target of 14.5 per cent. In September, S&P Global Ratings, the rating agency affirmed KCB Bank Kenya’s ratings of B+/B in the long and short-term while assigning a stable outlook for the Bank.
The ratings, said the agency, are supported by the KCB’s resilient earnings amid regulatory changes and challenging economic conditions. During the second quarter of 2018, 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.
“Despite a challenging business environment across all our markets, we are on track to deliver on our 2018 targets. This fourth quarter of the year has begun with vibrancy in most of the economies we operate which will form a good bedrock to a strong 2018 close and also tee up a good start to 2019,” said Mr. Oigara.
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. Today KCB Group Plc has the largest branch network in the Region of over 260 branches.