- KCB Group PLC, one of East Africa's leading financial institutions, has marked an impressive milestone in the first half of the year, ending June 30, 2023, after reporting a remarkable 54 per cent growth in total assets, reaching an impressive sum of Sh1.86 trillion, while net profit closed at Sh16.1 billion.
- On the revenue front, funded income grew by 12.1 per cent to Sh45.5 billion, while non-funded income experienced a substantial surge of 43.4 per cent to Sh27.6 billion.
- In recent corporate developments, KCB Group announced a Sh1 billion guarantee scheme in partnership with the Swedish International Development Cooperation Agency (SIDA).
KCB Group has marked an impressive milestone in the first half of the year, ending June 30, 2023, after reporting a remarkable 54 per cent growth in total assets, reaching an impressive sum of Sh1.86 trillion, while net profit closed at Sh16.1 billion.
This achievement comes despite a challenging economic environment across their operating markets.
The driving forces behind this substantial balance sheet growth were the consolidation of Trust Merchant Bank (TMB), acquired in December 2022, and a significant increase in customer deposits, which surged to Sh1.47 trillion.
This robust growth in deposits underscores the unwavering customer confidence in the KCB Group brand.
A notable highlight is the Group's loan book, which witnessed a substantial increase of 32 per cent, rising from Sh730.3 billion in the first half of 2022 to Sh964.8 billion in the same period this year.
This growth reflects the organisation’s commitment to supporting its diverse customer base in expanding its businesses.
The positive trend continued in the revenue department, as the Group reported a remarkable 22.2 per cent revenue growth, totalling Sh73.1 billion.
This growth can be attributed to several factors, including the consolidation and growth of TMB, an increase in customer loans, and a surge in non-funded income (NFI).
The NFI surge was driven by fees, commission earnings, and the sustained expansion of digital channel transactions and volumes.
However, the profit after tax faced notable impact due to aggressive provisioning on facilities in KCB Kenya, inherited legal claims from the National Bank of Kenya (NBK), and staff restructuring costs incurred in both KCBK and NBK as part of an investment to optimise organisational size.
The Group also prudently increased its loan loss provisions on foreign currency-denominated credit facilities to navigate the challenging operating environment.
While commenting on the impressive results, KCB Group CEO Paul Russo remarked, "Despite a challenging economic environment across our operating markets, the business remained resilient, delivering a strong balance sheet and increased contribution from regional businesses."
He further expressed optimism about the future, stating, "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."
Furthermore, KCB Group saw a significant contribution from businesses outside Kenya, with a remarkable 166 per cent increase to 38.1 per cent of the Group business, accompanied by a pre-tax profit of Sh8.5 billion.
On the revenue front, funded income grew by 12.1 per cent to Sh45.5 billion, while non-funded income experienced a substantial surge of 43.4 per cent to Sh27.6 billion.
Despite the impressive performance, operating costs saw a 48 per cent increase to Sh40.4 billion, primarily due to legacy legal claims, staff restructuring expenses, and TMB consolidation.
Customer deposits increased by 61.9 per cent, driven by the TMB consolidation and organic growth, leading to a corresponding growth in Customer Loans, totalling Sh964.8 billion, a notable 32 per cent increase.
KCB Group demonstrated its commitment to improving asset quality, with the Non-Performing Loan (NPL) ratio improving to 17.4 per cent, marking a 410bps improvement from the previous year.
Shareholders' funds also surged by 20 per cent to Sh218 billion, largely attributed to the profit increase for the period.
Furthermore, the Group maintained healthy capital ratios, comfortably complying with regulatory limits.
Core capital as a proportion of total risk-weighted assets stood at 15 per cent, surpassing the statutory minimum of 10.5 per cent.
Similarly, the total capital-to-risk-weighted assets ratio reached 18.4 per cent, exceeding the regulatory minimum of 14.5 per cent.
All banking subsidiaries operating outside Kenya remained compliant with their respective regulatory capital requirements.
In recent corporate developments, KCB Group announced a Sh1 billion guarantee scheme in partnership with the Swedish International Development Cooperation Agency (SIDA).
This scheme aims to de-risk SMEs in their pursuit of credit and growth ambitions.
Additionally, KCB Group inked an Africa-wide deal with the Pan-African Payment and Settlement System (PAPSS) to facilitate cross-border transactions on the continent, marking a significant step towards boosting intra-African trade and payments.
The bank also leveraged digital capabilities with a new service, allowing customers to make in-store payments through the KCB App using NFC-enabled smartphones at contactless payment terminals.
Furthermore, KCB and NBK collaborated with Britam General Insurance to distribute affordable health insurance products targeted at SMEs, aiming to contribute to the growth of small and medium-sized enterprises.
KCB Group's Chairman, Dr Joseph Kinyua, summed up the outlook by stating, "The Group is well positioned for future growth, riding on its solid governance structures and digital capabilities, strong regional presence and committed staff to support customers and other stakeholders."
He emphasised the Group's commitment to meaningful transformation and contributing to economic progress across their markets.