KCB Group has announced a remarkable 69 per cent increase in net profit for the first quarter of 2024, reaching Sh16.5 billion, up from Sh9.8 billion in the same period last year.
The group attributes this substantial growth to several key quarterly financial achievements.
The Group's total assets saw a significant rise of 22.4 per cent, closing the quarter at Sh2 trillion compared to Sh1.6 trillion in Q1 2023.
Total revenues experienced a notable increase of 31.6 per cent, amounting to Sh48.5 billion.
This growth was driven by both funded and non-funded income streams, with non-funded income contributing 36 per cent of the total revenues.
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However, the tier 1 lender’s loan impairment charge increased alarmingly by 53.4 per cent, resulting in a gross non-performing book of Sh205.3 billion and an NPL ratio of 18.2 per cent.
KCB Group CEO Paul Russo remarked, "Despite a difficult operating environment across the region, we saw a strong revenue performance in the business as we entrenched prudent credit, liquidity, cost, and overall risk management."
The increase in non-funded income was largely due to higher transaction volumes and the widespread adoption of digital banking services.
Russo further highlighted the growth in consumer deposits, reflecting the brand's strong customer trust, and the successful investments in digital and payments capabilities along with regional expansion.
Customer deposits rose substantially by 25.4 per cent, reaching Sh1.5 trillion, primarily from the Kenyan market.
Similarly, customer loans increased by 12.2 per cent, totalling Sh1.13 trillion, as the bank provided additional advances to support various business activities.
KCB's cost-to-income ratio improved to 43.3 per cent, down from 51.2 per cent in the previous year, reflecting strong income growth and effective cost management strategies.
However, total costs did increase by 11.3 per cent, rising from Sh18.9 billion to Sh21.0 billion, driven by inflationary pressures impacting the East African market.
This increase was due to downgrades in Kenya and the impact of foreign currency translation.
The Group has implemented various measures to improve asset quality and reduce these ratios in the short and long term.
Shareholders' funds grew by 11 per cent during the period, closing at Sh238.6 billion, up from Sh214.8 billion in the previous year.
This growth highlights the value gap between the Group's book and market valuations, presenting an attractive entry point for new shareholders and an opportunity for existing investors to expand their holdings.
Return on equity also saw an increase, rising from 19.7 per cent to 28.6 per cent.
In terms of capital adequacy, KCB's core capital as a proportion of total risk-weighted assets stood at 15.7 per cent, well above the statutory minimum of 10.5 per cent.
The total capital-to-risk-weighted assets ratio was 17.8 per cent, exceeding the regulatory minimum of 14.5 per cent.
All banking subsidiaries, except NBK, complied with their respective local regulatory capital requirements.
Furthermore, the contribution from Group businesses outside Kenya increased, accounting for 17.9 per cent of pretax profits and 13.1 per cent of total assets, highlighting the benefits of the Group's regional diversification strategy.
Looking ahead, KCB Group remains optimistic about the business outlook for the remainder of the year.
"We have made tangible progress to sustain superior shareholder value by delivering strong financial performance while driving our agenda to build a future-proof business. Prudent deployment of our capital has ensured that we were able to remain resilient and deliver for our stakeholders," stated KCB Group Chairman Dr Joseph Kinyua.
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