KCB Group Half Year Profit: KCB Group Plc posted a strong performance in the first half of the year, driven by improved economic activity, robust revenues and lower provisions charge. Profit after tax doubled to Ksh15.3 billion from Ksh7.6 billion a year ago amid the effects of the ongoing COVID-19 pandemic.
Revenues increased 14% on account of higher interest income driven by an increase in earning assets and lower cost of funding. “We saw a strong first half of the year for the business with improved economic activity. Resilience and diversification have helped us navigate the unfolding impact of the Covid-19 pandemic,” said KCB Group CEO & MD Joshua Oigara.
Revenue Growth: Total income increased 13.7% to Ksh51.2 billion during the period, with net interest income up by 17.7% to Ksh36.6 billion from Ksh31.1 billion last year. This was on the back of higher interest earning assets and effective management of cost of funding during the period.
Cost Management: Operating costs were up 7% on account of an increase in staff costs as the Group enforced cost management initiatives to ring-fence the business from the impact of the ongoing healthcare crisis.
The cost of risk fell to 2.2% from 4.0%, with the ratio of non-performing loans (NPLs) at 14.3% from 13.7% in 2020. The stock of NPL closed the half at Ksh95.7 billion from Ksh83.9 billion same period last year. Most of this increase occurred during the second half of last year, highlighting the strain on customers and their business because of the healthcare crisis.
Provisions for the period were down 40% to Ksh6.6 billion as the Covid-19 related impairments had been recognized in the full year 2020, and the facilities restructured to cushion customers from the impact of the pandemic.
Balance Sheet: KCB Group attained a historic milestone with the balance sheet closing the half year at Ksh1.02 trillion, up from Ksh953 billion, a 7% jump.
Customer deposits were up 4% to Ksh786.03 billion mainly due to current and savings accounts, while loans grew 9% on account of corporate term loans and retail check offs during the period to close at Ksh606.9 billion.
Shareholders’ equity grew 16% from Ksh132 billion to Ksh153 billion on improved profit for the period.
Key Financial Highlights
- Profit after Tax up 102% to 15.3 billion from KShs.7.6 billion
- Assets stood at Ksh1.02 trillion from Ksh953 billion
- Customer Deposits increased 4% to Ksh786.03 billion from Ksh758.0B
- Loans grew 9% to close at Ksh606.9 billion.
Outlook and Group Strategy: Despite the impact of the healthcare crisis, the Group is on track to achieve its three-year Beyond Banking Strategy anchored on enhanced customer experience and digitization.
“While the pandemic is still in our midst, the rollout of a vaccine globally has brought hope that the crisis will soon be under control,” said KCB Group Chairman Andrew Kairu.“Looking forward, we believe we shall see the operating environment and consequently our customer businesses continue to recover,”
To scale regional presence, the Group is at the tail end of acquiring a majority stake in Banque Populaire du Rwanda PLC (BPR) and the African Banking Corporation Tanzania Limited (BancABC Tanzania) in Rwanda and Tanzania respectively. This transaction will bolster the Group’s market share in these two key markets and grow the contribution of international businesses to the Group.
