KCB Group has posted a 15.5 per cent drop in profit before tax to Sh48.5 billion compared to Sh57.3 billion in 2022, the bank announced in its 2023 full year financial results Wednesday.

The Group posted Sh37.5 billion in net profit for the full year ended December 31, 2023, as its revenues increased by 27.2 per cent on the back of funded and non-funded incomes.

In the period in review, KCB costs went up from Sh59.4 billion in 2022 to Sh83.2 billion due to consolidation of its DRC subsidiary, TMB, voluntary retirement program and legal costs.

KCB’s loan provisions also spiked by 154.7 per cent from downgraded facilities in Kenya and extra provisions on forex facilities from the depreciating Kenya Shilling against the US dollar.

The ratio of non-performing loans (NPLs) dropped from 17.3 per cent in 2022 to 16.6 per cent to Sh199.1 billion due to loan book growth, as the Group tries to improve asset quality.

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However, the lender’s total assets grew 40 per cent to close at Sh2.17 trillion, driven by a significant surge in customer deposits in spite of the tough operating environment in Kenya.

Revenues grew to Sh165.2 billion driven by funded income from earning assets while non-funded income (33.9 per cent growth) was backed by more network transactions, adoption of digital banking and alternative channels, entry into new markets and trade finance business.

The contribution of KCB Group businesses (excluding KCB Bank Kenya) to the overall profitability also increased by 36.7 per cent from 12.2 per cent in the previous fiscal year.

Similarly, the pre-tax profit from the Group’s businesses rose to Sh17.8 billion from Sh7 billion in the previous year, a strong indication of its regional expansion exploits paying off.

“We had a fairly good run in the 12 months in the wake of difficult economic times, with most of the business lines achieving strong organic growth,” said KCB Group CEO Paul Russo.

He added: “We have extended a helping hand to our customers through our loan book to support them to navigate and accomplish their ambitions. As a result of growing customer trust in the brand, we saw deposits grow significantly during the period.”

Russo says the group will focus on cost management to give the bank room to invest in initiatives that will boost its growth efforts in 2024, backed by capital and liquidity buffers.

At the same time, KCB customer deposits grew 48.9 per cent to Sh1.7 trillion from Sh1.14 trillion in 2022, largely from KCB Bank Kenya business and full year consolidation of TMB.

Loans dispensed to customers also went up by 28.7 per cent from additional disbursements made during the financial year to close at Sh1.2 trillion from Sh934 billion in 2022.

Shareholders’ funds stood at Sh236.4 billion from Sh206.3 billion in 2022, a 14 per cent growth on profitability.

KCB Group shareholders will be a disappointed lot as the Kenyan lender’s board did not declare any dividends for the financial year ended December 31, 2023 to preserve capital.