KCB Group first-half profit rises to Sh15.1B

KCB Group has announced a rise by 14 percent in its Profit Before Tax to 15.1 billion shillings for its Half Year results from 13.2 billion.

“A 9 percent growth of the Kenya Balance sheet has boosted overall contribution,” it announced on its Twitter Feed.

Its operations in Rwanda, Burundi, Tanzania, Uganda and South Sudan, contributed a net interest income 22.53 billion shillings in the first half representing a 16percent rise.

KCB Group Chairman Ngeny Biwott, however, said “The first six months of the year 2016 can be described as slow but stable.”

“The business in Burundi remains slow and the required safety is marginal,” He added.

KCB Group CEO and Managing Director Joshua Oigara on the other hand said, “This has been a difficult year for South Sudan but we’re optimistic about that market.”

KCB Group half year 2016 results highlights

Profit after tax: The lender reported a 14% rise in half year 2016 net profit to KES 10.5 billion on the back of higher interest income from customer loans. 

Profit before tax: KCB Bank group recorded a 14% increase in their profit before tax  from KES 13.2 billion in 2015 to KES 15.1 billion in its first half of 2016 results, with this performance attributed to growth in non-funded income and costs controls.

Net Interest Income: Up 16% from KES. 19.4 Billion to KES.22.5Billion,driven by a stronger loan book which expanded by KES 27 billion to KE 347.4 billion (8.3 %) and better yields in the market.

Net Provisions for Bad Debts: Up 53.8% from KES 1.3Bn to KES 2 Billion

Non-Performing Loans(NPL’s) :The KCB group’s NPL’s expanded by 36% during the first half of the year even as the bank works at pursuing the recovery of the loans so as to reverse the current upsurge. The bank therefore increased its loan loss provision by 51% from KES 1.37 billion to KES 2.07 billion in the past three months alone to counter concerns on the rising NPL’s.

Total Assets: The bank’s total assets dropped 1% at KEs. 560 Billion but nonetheless retained its position as the biggest bank by asset size, despite the negative  effect from the currency devaluation in South Sudan.

Total liabilities: The bank saw a decline in its liabilities to KES 469 billion as a result of a reduction in customer deposits and the depreciation of the South Sudan Pound. The lender’s borrowed funds decreased by 21% due to repayment of debt.

Customer deposits: Declined 2% at KES.433Billion from KES. 443Billion largely due to South Sudan currency devaluation

Cost to Income Ratio: Declined from 48.6% to 47.9% slightly below the industry average

Long term debt funding: Down 71% from KES.22.5Billion to KES. 17.7Billion

Focus: The lender looks to enhancing growth momentum in the key markets across the region as well as advance other new business lines like Bancassurance, KCB Capital and Sahl Banking during the next half year.

• KCB Sahl, the lender’s Islamic banking arm recovered from a low kick off to record KES 43 million, thanks to increased investment on the business, roll out of more niche products and a sharp rise in customer numbers.
• The bank’s bancassurance vehicle-The KCB Insurance Agency-grew profitability by 91% to KES 149million during the period, as it benefitted from increased insurance penetration in Kenya.
• Digital banking agenda; The bank believes that the future of banking is in digital. Of the Bank’s total transactions, 70% were handled through the non-branch channels during the period under review, compared to 61% the previous year. KCB Mpesa, in which KCB has partnered with Safaricom continues post strong growth, with over KES.11.3 billion in loans disbursed so far since the launch in March 2015 and serving at least 6.5 Million customers. The bank, going forward into the future is also looking at boosting investments into SMEs, seeking partnerships with governments, and private institutions to deepen financial inclusion across the East African market.
• In its regional subsidiaries; Uganda, Tanzania and Rwanda were stable in the period and turned in a profit, but there were concerns in South Sudan and Burundi due political instability.