KCB Group Posts KSh 40.8 Billion In FY 2022 Net Profit

KCB Group PLC recorded 40.8 billion shillings in profit after tax for the full year ending December 2022 on higher funded and non-funded income streams.

This was a 19.5% rise in profitability from KShs.34.2 billion reported in 2021, KCB said on Wednesday during the release of the financials.

The profit before tax contribution of other subsidiaries excluding KCB Bank Kenya increased to 17.0% (up from 13.9% in 2021), riding on organic growth and increased scale in the businesses.

“The strong performance for the year was a result of our business strategy that is anchored on customer obsession, sharper execution, and productive organizational culture. The business benefited from a vibrant core banking business, growth of new business lines, and accelerated digital transformation to post this record performance”, said Mr. Russo.

“Overall, we have positive momentum, and we shall build on this and ensure that we make a significant step change in culture and performance, across all our business units. Despite a challenging operating environment, the belief in our people’s enhanced digital capabilities, impetus in our regional businesses, and successful integration of Trust Merchant Bank (TMB)—our latest subsidiary in the Democratic Republic of Congo— makes a good case for a better performance” he added.

Revenues increased by 19.6% to KShs. 129.9 billion, driven by net interest income which grew by 11.5%, supported by earning assets and partially offset by an increase in interest expenses from higher costs of borrowing and interbank market rates. Non-funded income grew 39.8% largely from trade finance income, lending fees, and commissions.

Costs were up 24.1% compared to last year on account of increased business activities and the impact of BPR and TMB acquisitions.

Provisions increased marginally by 1.7% compared to the previous year; a reflection of appropriateness in IFRS9 staging done in prior years.

On asset quality, the ratio of non-performing loans (NPL) stood at 17.3%, largely driven by downgrades from the KCB Kenya business. Gross NPLs stood at KShs161.2 billion. Whereas both the NPL ratio and stock show an increase compared to the prior year, there is a remarkable reduction from the peak numbers in June 2022.

On the balance sheet side, total assets stood at KShs.1.55 trillion, growing 36.4% on higher loans and investment in government securities and funded by growth in customer deposits and additional borrowings. Customer loans increased by 27.8% to KShs.863 billion from additional lending in the Kenya business, increased lending in the international businesses, and the acquisition of TMB.

Comparatively, customer deposits hit the trillion shillings mark, increasing by 35.6% to KShs.1.135 trillion, mainly from TMB and organic growth in the existing businesses.

Shareholders’ funds grew by 18.9% from KShs.173.5 billion to KShs.206.3 billion on improved and accumulated profits for the year to date.

KCB Group’s capital base remained well within both internal and regulatory limits. Core capital as a proportion of total risk-weighted assets stands at 13.9% against the statutory minimum of 10.5%. The total capital-to-risk-weighted assets ratio was 17.1% against a regulatory minimum of 14.5%.

The Board has proposed a final dividend payout of KShs. 1.00 per share, subject to shareholder approval. This is in addition to an interim payout of KShs. 1.00 per share which was paid out in January 2023. This brings the total dividend payout for the year to KShs. 6.4 billion.

“We have made significant investments in our regional expansion strategy among them, our latest entry into DRC through the acquisition of 85% of TMB. The investments made are key to accelerating our future growth and commitment to delivering sustainable shareholder value,” said KCB Group Chairman Andrew Wambari Kairu.