KCB Group Plc Posts 49% Rise In Profit After Tax To Ksh 45.8 Billion

KCB Group PLC recorded Ksh 45.8 billion in profit after tax for the first nine months of the year, driven by sustained revenue growth. This was a 49% growth from KShs.30.7 billion posted a similar period last year.

Revenues increased by 22% to KShs.142.9 billion, bolstered by both funded and non- funded lines across the subsidiaries.

The contribution by subsidiaries (excluding KCB Bank Kenya) improved during the period, closing at 36.6% in profit after tax and 34% in total assets, a demonstration of the continued benefits of diversification to other markets outside Kenya.

“The operating environment has been tough across all our markets, but we have continued to walk the journey with our customers while ensuring our key fundamentals remain strong. We are optimistic of a strong end of the year, riding on improving market conditions, solutioning for customers and tapping the great strength of our people,” said KCB Group CEO Paul Russo, while releasing the results on Wednesday.

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“The Group continued to leverage its deep understanding of local markets and cultures, allowing us to provide tailored financial solutions to customers wherever they are in the region. We have made deliberate investments to support regional trade and connect millions of people across the world to opportunities on the African continent and beyond whilst making a positive social impact in the communities,” he added.

Financial Highlights

On the balance sheet side, total assets stood at 2.0 trillion, on the back of stable customer deposits growth which closed the period at KShs. 1.5 trillion. Net Loans & Advances ticked up quarter on quarter to KShs.1.1 trillion benefiting from growth in retail sector lending that outpaced the impact from the appreciation of the shilling on the foreign currency denominated loans.

Income was up 22%, with a strong show on both funded and non-funded income Net Interest income grew by 24% supported by improved yields and increased lending to key segments, significantly offset by increase in interest expense driven by high cost of funds. Non-Funded Income (NFI) was boosted by FX income, transaction fees and strong revenues from Trust Merchant Bank (TMB), our DRC-based subsidiary.

Total costs grew 11%driven by higher staff costs, technology expenses, spending related to business volumes and continued prudent provisioning for Non-Performing Loans (NPL).

The Group’s stock of NPLs stood at KShs.215.3 billion, which saw the NPL ratio close the quarter at 18.5%, reflecting the economic conditions in different sectors.

To mitigate the effect of increased NPLs, provisions increased year on year by 2%. The Group continues to prioritize efforts to improve asset quality with various measures in place to reduce the NPL ratio both in the short and long-term.

Looking at shareholder value, return on equity improved to 25.6% up from 19.6% last Shareholders’ funds grew by 14% during the period to close at KShs. 249 billion up from KShs.219 billion.

The Group maintained strong capital buffers with all banking subsidiaries sustaining robust capital ratios. Group core capital as a proportion of total risk-weighted assets stood at 16.5% against the statutory minimum of 10.5% while the total capital to risk- weighted assets ratio was at 3% against a regulatory minimum of 14.5%. All banking subsidiaries except NBK were compliant with their respective local regulatory capital requirements.

“The Group business is well positioned to deliver stronger shareholder value, riding on its solid capital and liquidity positions, robust governance and dedication to sustainable business practices. We foresee remarkable resilience with recovering economic conditions across markets,” said KCB Group Chairman Dr. Joseph Kinyua.