KCB Group PLC has doubled its half-year profit after tax to Sh15.3 billion from Sh7.6 billion last year despite adverse effects of Covid-19 pandemic on businesses and the economy.
Kenya Commercial Bank’s strong performance in the first half of the year was driven by improved economic activity, robust revenues and lower provisions charge.
The financial institution’s revenues went up by 14 per cent on the back of higher interest income driven by an increase in earning assets and lower cost of funding.
The value of KCB’s assets rose to Sh1.02 trillion from Sh953 billion, as customer deposits rose by 4 per cent to Sh786.03 billion from sh758.0 billion, while loans grew by 9 per cent to close at Sh606.9 billion.
“We saw a strong first half of the year for the business with improved economic activity. The resilient and diversified nature of our business has helped us navigate the unfolding impact of the Covid-19 pandemic,” said KCB Group CEO and MD Joshua Oigara.
“The business is well-positioned to catalyse the ongoing economic recovery as well as benefit from this resurgence,” he added.
The company’s total income increased from 13.7 per cent to Sh51.2 billion during the period, with net interest income going up by 17.7 per cent to Sh36.6 billion from Sh31.1 billion in 2020.
Joshua Oigara. PHOTO/COURTESY
This growth was largely on the back of higher interest earning assets and effective management of cost of funding during the period.
Operating costs rose by 7 per cent due to an increase in staff costs as the Group enforced cost management initiatives to ring-fence the business from the impact of the pandemic.
The cost of risk fell to 2.2 per cent from 4.0 per cent, with the ratio of non-performing loans (NPLs) at 14.3 per cent from 13.7 per cent in 2020.
The stock of NPL closed the half at Sh95.7 billion, from Sh83.9 billion in the same period last year with most increase occurring during the second half of last year, as clients grappled with strained business due to Covid-19.
Provisions for the period were down 40 per cent to Sh6.6 billion as pandemic-related impairments were recognized in the full year 2020, and the facilities restructured to cushion customers from the pandemic’s impact.
KCB Group attained a historic milestone with the balance sheet closing the half of the year at Sh1.02 trillion, up from Sh953 billion, representing a 7 per cent spike.
Customer deposits rose by 4 per cent to Sh786.03 billion mainly due to current and savings accounts, while loans grew 9 per cent due to corporate term loans and retail check-offs during the period to close at Sh606.9 billion.
Shareholders’ equity also experienced a growth of 16 per cent from Sh132 billion to Sh153 billion on improved profit for the period.
The Group maintained a solid capital position at Sh172.6 billion, representing a total capital to risk-weighted assets ratio of 21.8 per cent against a regulatory minimum of 14.5 per cent.
The Group’s core capital as a proportion of total risk-weighted assets closed the period at 18.2 per cent against the Central Bank of Kenya statutory minimum of 10.5 per cent.
Despite the impact of Covid-19, KCB is on the path to achieve its three-year Beyond Banking Strategy anchored on delivering the best in customer experience and driving a digital future.
“While the pandemic is still in our midst, the roll out of a vaccine globally has brought hope that the crisis will soon be under control. The resilience and providence of our concerted efforts to reinforce the sustainability of our business have enabled us to support and walk with our customers, staff and other stakeholders,” said KCB Group Chairman Andrew Kairu.
He added, “Looking forward, we believe we shall see the operating environment, and consequently our customer businesses continue to recover.”
In line with its strategy to upscale its regional presence, KCB is finalizing the acquisition of a majority stake in Banque Populaire du Rwanda PLC (BPR) and the African Banking Corporation Tanzania Limited (BancABC Tanzania) in Rwanda and Tanzania respectively.
The transaction is expected to strengthen the company’s market share in these two key markets and grow the contribution of international businesses to the Group.
In the period under review, KCB was named Kenya’s Best Bank in the 2021 Euromoney global awards and awarded Africa’s Best Responsible Bank in the Euromoney Awards for Excellence.
KCB Group was in August recognized by the Global Finance Sustainable Finance Awards and bagged the Outstanding Leadership in Sustainable Loans in Africa category.
It was also feted as the Best Bank in Customer Experience in Kenya and the Most Innovative Banking Brand in Kenya by the 2021 Global Brands Magazine Awards.
KCB also scooped 15 awards during the 2021 Think Business Banking Awards and its subsidiaries - KCB Bank Kenya and National Bank of Kenya (NBK)- won 11 and 4 awards, respectively, largely based on digital banking, product marketing, product innovation and mortgage finance.