KCB Group Plc more than doubled its profit after tax for the nine months ending September 2021.
Net profit stood at Ksh25.2 billion from Ksh10.9 billion a year ago, a 131 percent jump, driven by higher income and reduced provisions as recovery from COVID-19 accelerated in quarter three.
“This is the strongest quarter for us since COVID-19 struck 20 months ago, with clear signs of economic recovery across key sectors. While we are cautiously optimistic of the prospects, especially due to the dynamic nature of the healthcare challenges, we project that the worst is behind us,” said KCB Group CEO & MD Joshua Oigara.
“Our focus was on cost management, cash preservation and driving sustainable business growth. Our resolve to support our customers to navigate the challenges has helped them pick up from the subdued business environment,” he added.
The Group recorded a 16 percent rise in total income to Ksh79.9 billion, on account of higher interest income—driven by an increase in earning assets—, higher non-interest income – driven by increased transactional volumes and FX income and lower cost of funding.
At Ksh34.7 billion during the period, expenses rose by 9 percent on account of increased staff costs partially offset by a decrease in other operating expenses as the Group rolled out cost management initiatives to ring-fence the business from the impact of Covid-19.
During the period, the cost of risk improved to 200 basis points driven by reduced provisions in corporate and digital loans, while the ratio of non-performing loans (NPL) decreased from 15.1 percent to 13.7 percent. Provisions were 53 percent lower to end the period at Ksh9.3 billion from Ksh20 billion a similar period last year.
The stock of NPL rose marginally to Ksh98.1 billion, from Ksh97 billion posted the same period last year mainly from KCB Bank Kenya and partially offset by a reduction in National Bank of Kenya, KCB Bank Rwanda, and KCB Bank Tanzania stock.
Total assets increased by 15 percent to Ksh1.12 trillion, driven by organic growth across our businesses and the acquisition of Banque Populaire du Rwanda (BPR) in Rwanda.
Customer deposits stood at Ksh859 billion, an 11 percent jump largely due to organic growth in Kenya while gross loans rose 12 percent to Ksh718 billion on account of improved lending in Kenya, Uganda, and Rwanda.
Shareholders’ equity grew 20 percent from Ksh136 billion to Ksh163 billion on improved profit for the period.
All key capital ratios were well above the minimum regulatory requirement, giving the Group a strong headroom for growth. Total capital stood at KSsh173.5 billion, representing a total capital to risk-weighted assets ratio of 20.6 percent against a regulatory minimum of 14.5 percent. The Group’s core capital as a proportion of total risk-weighted assets closed the period at 17.3 percent against the Central Bank of Kenya statutory minimum of 10.5 percent.
The Directors have approved an interim dividend of Ksh1.00 for every ordinary share of KSsh1.00 held. The dividend will be paid on or about Friday, January 14, 2022, to shareholders on the register at the close of business on Thursday, December 9, 2021.
The Group is at the tail end of acquiring a majority stake in the African Banking Corporation Tanzania Limited (BancABC Tanzania) in Tanzania.
The Group successfully completed the acquisition of BPR in August 2021 and has kicked off integration activities in what will see the full consolidation of BPR and KCB Bank Rwanda into a single banking entity.
This twin acquisition will bolster the Group’s market share in these two key markets and grow the contribution of international businesses to the Group.
The Group has entered the last quarter of the second year of its three-year Beyond Banking Strategy with more optimism.
“In anticipation of a stronger 2022 and a more sustained recovery, we are deepening our focus on supporting various sectors of the economy such as MSMEs as we walk with our customers to regain the lost foothold due to COVID-19,” said Mr Oigara.
“We are making strategic investments to deepen our regional play while building a sustainable business for the future that is anchored on people, planet and profits.”
During the period under review, the Group deepened its sustainability agenda which is anchored on environmental, social, economic, and financial pillars.
“This is in the realization that business is not just about making profits but also transforming communities where we operate in while ensuring that our operations are climate-friendly. This, we do by partnering with like-minded stakeholders,” the Bank said in a statement.
In line with this, in October, the Bank introduced a Code of Ethics for all its service providers which will require them to subscribe to guidelines on sustainable operations.
In pursuit of its green ambition and in the wake of the 2021 United Nations Climate Change Conference, also known as COP26, the Group has signed to Net Zero emissions target by 2050, joining other global institutions in the race to zero. Related to this, KCB Group has welcomed the release of the Central Bank of Kenya Guidance on Climate Risk Management.
Late last month, KCB Group was ranked eighth globally in the 2021 Fortune Change the World list as one of 100 companies world-wide that have made a positive social and environmental impact.
The Bank was recognized for its support to the communities since the onset of Covid-19 and their service to society spearheaded by the KCB Foundation. In addition to this award, KCB Group has been given an Honorable mention for Best Bank for Women for serving fragile and conflict-affected situations at the 2021 Global SME Finance Forum Awards.
Earlier, KCB Group was recognized as the Safest Bank in Africa by Global Finance World’s Safest Bank, the Most Valuable Financial Kenyan brand for the year 2021 by Brand Finance, Best Bank by the Global Finance – World’s Best Bank Awards 2021, Best ESG Solution by the Middle East and Africa Innovations Awards 2021, and Most Admired Sales Company in Kenya for the year 2020 by Employability Test.com.
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