KCB Group has recorded Sh40.8 billion in profit after tax for the full year ending December 2022 on the back of higher funded and non-funded income streams.

The net profit announced by KCB when it released its financials on Wednesday marked a 19.5 per cent increase in profitability by the bank from Sh34.2 billion reported in 2021.

The pre-tax profit contributed by other subsidiaries excepting KCB Bank Kenya increased to 17 per cent from 13.9 per cent in 2021, riding on organic growth and increased scale in the businesses.

Figures & Indicators

“The strong performance for the year was as a result of our business strategy that is anchored on customer obsession, sharper execution, and a productive organisation 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 KCB Group CEO Paul Russo.

Ruso noted that the group had a positive momentum overall and would build on that to ensure KCB makes significant change in culture and performance, across all business units.

“Despite a challenging operating environment, the belief in our people, 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 better performance,” Ruso added.

The bank’s revenues rose by 19.6 per cent to Sh129.9 billion on the back of net interest income that grew by 11.5 per cent, backed by earning assets and partially offset by an increase in interest expenses from higher costs of borrowing and interbank market rates.

In the period under review, non-funded income experienced a 39.8 per cent increase largely based on trade finance income, lending fees and commissions.

At the same time, costs were up by 24.1 per cent compared to the same period last year on account of increased business activities and impact of BPR and TMB acquisitions.

Provisions also improved marginally by 1.7 per cent compared to the previous year, which reflected appositeness in IFRS9 staging done in the preceding years.

The ratio of non-performing loans (NPL) stood at 17.3 per cent, and was largely driven by downgrades from the KCB Kenya business, while Gross NPLs stood at Sh161.2 billion.

Whereas both the NPL ratio and stock indicated an increase compared to the previous year, it experienced a remarkable reduction from the peak numbers witnessed in June 2022.

KCB’s total assets on the balance sheet stood at Sh1.55 trillion, representing a 36.4 per cent growth on higher in loans and investment in government securities, customer deposits and additional borrowing.

Loans held by customer increased by 27.8 per cent to Sh863 billion from extra lending in the Kenya business, increased lending in the international businesses and acquisition of TMB.

Similarly, deposits by customers hit the trillion-shilling mark, based on a 35.6 per cent growth to Sh1.135 trillion, mainly from TMB and organic growth in its existing businesses.

Funds belonging to shareholders also experienced a growth of 18.9 per cent from Sh173.5 billion to Sh206.3 billion based on improved and accumulated profits for the year to date.

The Group’s capital base remained within internal and regulatory limits with the core capital as a proportion of total risk weighted assets standing at 13.9 per cent against the statutory minimum of 10.5 per cent.

KCB’s total capital to risk-weighted assets ratio stood at 17.1 per cent against a minimum regulatory requirement of 14.5 per cent.

In that regard, the board proposed a final dividend payout of Sh1.00 per share, subject to approval by shareholders, alongside an interim payout of Sh1.00 per share paid out in January 2023.

This means the total dividend payout for the year will be Sh6.4 billion.

“We have made significant investments in our regional expansion strategy among them, our latest entry into DRC through the acquisition of 85 per cent 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.

Outlook 2023

Kairu said KCB Group was bullish about 2023 and is gearing itself up to maximize on all its investments made and the available opportunities in the various markets it operates in.

“We have in place a robust strategy that enables us to prudently deploy our capital and resources across the region to ensure superior returns from our investments,” stated Kairu.