KCB Group on Wednesday announced it had earned Sh19.6 billion in half-year profits after tax for the period ending June 30, 2022, which marked a 28.4 per cent increase from 2021.

KCB says the growth from Sh15.3 billion was largely driven by enhanced funded and non-funded income streams as well as increased contribution from its international subsidiaries.

Its total operating income grew by 16.8 per cent mainly due to a 29.9 per cent growth in Non-Funded Income.

At the same time, the Group’s businesses improved their profit contribution to 16.8 per cent largely driven by new business growth and the impact of BPR Bank.

“We delivered solid results, supported by our diversified business model as we sharpened our focus on customer obsession and execution to better support our customers in a rather difficult operating environment. Despite some uncertainties and headwinds, we saw sustained signs of recovery across the region, allowing us to deliver stronger shareholder value,” said KCB Group CEO Paul Russo.

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Paul Russo. PHOTO/COURTESY

The bank’s interest income also went up by 15.7 per cent to Sh54.5 billion which was majorly driven by a growth of 31.5% in income derived from government securities.

This was partially offset by a 30.3 per cent growth in interest expense as cost of funding marginally rose during the period and net interest income grew by 11.5 per cent to Sh40.6 billion.

The 29.9 per cent jump in non-funded income was driven by lending fees, services fees –

on account of growing activity especially in trade finance and foreign exchange income.

Significant to this outcome was the contribution from KCB’s digital channels which maintained 98 per cent level of transactions by number performed outside the branches.

According to KCB, its mobile lending values grew by 23 per cent to Sh91 billion as total values transacted on the mobile increased by 22 per cent to Sh1.28 trillion.

The Group says the values transacted on its internet banking platform and merchant/POS terminals also realized a significant growth of 102 per cent and 50 per cent respectively.

This performance boosted the KCB Group NFI ratio to 32.1 per cent compared to 28.9 per cent achieved in the previous year.

Provisions went down by 34.4 per cent largely due to a drop in corporate and digital lending impairment charge.

Its operating costs also rose by 20.3 per cent on consolidation of BPR Bank Rwanda, higher spend on customer acquisition initiatives, investment in technology and higher staff costs.

This increase drove up KCB’s cost to income ratio to 45.7 per cent, as it expressed confidence this will reduce to below 44 per cent when transition related activities conclude.

KCB Group’s total assets stood at Sh1.21 trillion for the period, a growth of 18.4 per cent based on additional lending, deposits growth and the consolidation of the BPR subsidiary.

Customer loans grew by 20.2 per cent to Sh730 billion from new disbursements across the Group as client deposits also grew to Sh909 billion, a 15.6 per cent increase from 2021.

Andrew Wambari Kairu. PHOTO/COURTESY

Shareholders’ funds also experienced a growth of 17.1 per cent to stand at Sh179.1 billion on improved profitability for the period.

KCB deepened its focus on scaling regional play by signing a key deal with shareholders of TMB to acquire a majority stake in the Democratic Republic of Congo (DRC)-based lender.

The transaction is expected to close in the fourth quarter of 2022, subject to regulatory, shareholders and other approvals. This will see KCB acquire 85% of the shares in TMB with an option to acquire the balance in due course.

“Looking ahead, we remain confident of a stronger second half and an economic turnaround across the region. We remain focused on delivering on business growth while at the same time continuously building a socially responsible and sustainable business,” said KCB Group Chairman Andrew Wambari Kairu.