KCB Group Plc recorded a historic 74 percent rise in profit after tax for the full year ending December 2021, riding on an economic recovery across markets.
Net profit grew to Ksh34.2 billion compared to Ksh19.6 billion a year earlier, on the back of increased income, cost management and lower credit provisions which saw the Group post higher returns to shareholders.
“We made significant progress in achieving our 2021 strategic targets which delivered a strong financial performance that was in line with gradual economic recovery across all markets. The third and fourth quarters were the turning point with a pick-up in lending activity even as the COVID-19 pandemic continued to impact on economic activity,” said Group CEO & MD Joshua Oigara.
“During the period, we deliberately focused on supporting customers to weather the healthcare storm. We expect good business momentum this year with a projected economic recovery across markets.”
Revenues increased by 13.5% to Ksh108.6 billion on account of a rise in net interest income which was up 15.0% to Ksh77.7 billion. Non-funded income grew by 9.9% to Ksh30.9 billion on increased customer transactions, FX income and income from accelerated loan growth.
Costs went up by 11.9% to Ksh47.8 billion from Ksh42.8 billion on account of an increase in staff and organizational costs, consolidation of Banque Populaire du Rwanda (BPR) and inflationary adjustments across the group. Other operating expenses increased marginally by 2.8% to close at Ksh22.9 billion from Ksh22.3 billion last year with improved cost management across the Group.
The ratio of non-performing loans (NPL) increased from 14.7% to 16.5%, signaling the longer-term effects of COVID-19 impact. Several key sectors, largely construction, hospitality, and manufacturing continued to come under pressure with slow recovery. Provisions for the period reduced by 52% to close at Ksh13.0 billion from Ksh27.2 billion a similar period last year. The decrease is largely due to lower corporate and digital lending impairment charge after the deliberate action on covid related provisions absorbed in the previous year.
Core capital as a proportion of total risk-weighted assets closed the period at 18.0% against the Central Bank of Kenya statutory minimum of 10.5%. The total capital to risk-weighted assets ratio was at 21.7% against a regulatory minimum of 14.5%.
The Board of Directors has recommended a final dividend of Ksh2.00 per share. This follows an interim dividend of Ksh1.00 paid out in January this year. The final dividend will be payable to the members of the company on the share register at the close of the business on Monday, April 25, 2022. If approved, the full dividend per share for the year ended December 31, 2021, will be Ksh3.00 for each ordinary share.
The Group successfully completed the acquisition of BPR on July 31, 2021 and has kicked off integration activities that will see the amalgamation of BPR and KCB Bank Rwanda into a single banking business.
“The benefits of our regional expansion continue to positively contribute to the KCB’s performance. In 2021, the profit before-tax contribution from Group businesses went up to 13.7%, putting us on track towards our 20% target this year. KCB will continue exploring and pursuing attractive regional expansion opportunities to enhance our regional participation, accelerate growth, and maintain sustainable long-term performance,” said KCB Group Chairman Andrew Wambari Kairu. “Our future has additional opportunities to exploit, details of which will be communicated as they develop” he added.
KCB is optimistic of better prospects this year on the back of a projected economic recovery in East Africa.
“We are optimistic about the East African economy’s inherent medium and long-term potential despite the looming effects of the geopolitical crįsis in Europe, lurking threats of COVID-19 and other local developments, including the upcoming General Elections in Kenya,” said Mr Kairu.
“The priority is to identify suitable investment prospects and consumption drivers to accelerate the pace of recovery and growth. As the growth gains momentum, it will lead to many more opportunities for all sectors of the economy and in turn, inclusive growth.”