KCB Group’s Profits Drop By 20% For The 6 Months Of 2023

KCB Group has reported a decline in profit after tax by 20 percent to 15.6 billion shillings in the first six months of the year to June. This drop is from 19.5 billion shillings reported over the same period last year.

Paul Russo, KCB Group Chief Executive Officer, said that the 20.1 percent profit drop was attributed to aggressive provisioning on facilities in KCB Kenya, inherited legal claims in National Bank of Kenya (NBK), and staff restructuring costs incurred in KCBK and NBK being an investment to right-size the organizations.

At the same time, the bank recorded a 54 percent growth in total assets to 1.86 trillion shillings in the first half of the year ending June 30, 2023, as net profit closed at 16.1 billion shillings.

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The balance sheet growth was driven by the consolidation of Trust Merchant Bank (TMB) acquired in December 2022, and an increase in customer deposits to 1.47 trillion shillings, underpinning the customer confidence in our brand.

Consequently, the loan book increased by 32 percent to 964.8 billion shillings from 730.3 billion shillings in half year 2022 as we continue to support our customers to grow their businesses.

Revenue grew by 22.2 percent to 73.1 billion shillings, driven by consolidation and growth of TMB, growth in customer loans, and non-funded income (NFI).

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The NFI stream was propelled by fees and commissions as well as sustained growth of digital channel transactions and volumes.

Profit after tax was greatly impacted by aggressive provisioning on facilities in KCB Kenya, inherited legal claims in the National Bank of Kenya (NBK), and staff restructuring costs incurred in KCBK, and NBK being an investment to right-size the organizations.

The Group also prudently raised its loan loss provisions on foreign currency-denominated credit facilities on account of a challenging operating environment, “Despite a challenging economic environment across our operating markets, the business remained resilient delivering a strong balance sheet and increased contribution from regional businesses. Profitability was under pressure in the first half from increased funding costs on higher market deposit rates, prudent provisioning on legacy credit facilities, and provisions for legacy legal claims at NBK,” said KCB Group CEO Paul Russo.

“Looking ahead, noting the actions we have taken and with significantly improved liquidity, business focus is on accelerated performance in the second half of the year while supporting the distressed customers” he added.

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