Strong loan growth in Kenya Business and prudent costs management helped push up KCB Group pretax profits 18.3 per cent in the third quarter of 2016. Profit before tax for the nine months ending September 30, 2016, rose to Ksh22.9 billion from Khs19.3 billion in a similar period last year, KCB Group CEO and MD Joshua Oigara said today.
KCB effectively beat Equity Group Holdings, which recorded profit before tax for the nine months period to 30th September 2016 of Ksh21.5 billion.
The Group recorded a 27% growth in Net Interest Income, driven by asset book growth, better yields and reduction in cost of funds. “The performance reflects continued resilience across the seven markets that we operate in. The business benefitted largely from a diversified income structure, prudent cost management and deliberate investments in infrastructure and digital channels,” said Mr. Oigara while releasing the results.
The Q3 financials showed that total expenses increased by 7%, to support business growth, investment in channels and infrastructure. Provisions for bad debts were down 11% – to KShs.3.4 billion in September 2016. Overall Group gross nonperforming loans declined by Ksh1.9 billion on a quarter to quarter basis on the back of enhanced Credit processes and recoveries.
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In August 2016, the bank successfully re-implemented an upgrade of its core banking system T24 to boost operational efficiencies, facilitate technology innovation, and allow for easier interface with other platforms and increase reliability. “The new system offers increased functionality and great customer experience and is a firm base for our journey towards a service oriented architecture in line with our customer strategy,” added the Group CEO.
The Group’s total assets declined by 6% year on year attributed to currency devaluation in South Sudan market. Total assets without the South Sudan component increased by 10%. The pressure on the South Sudan Pound continues to grow since December 2015 when the currency was floated.
Mr Oigara said the Group’s asset book is poised to grow steadily as the Bank makes bigger investments in technology systems and digital platforms to support the business while consolidating the international business. “We see the new fin-tech capabilities giving us a strong business position and stable performance in the coming years as the future of banking shifts into digital,” said Mr. Oigara.
The financials indicate that net loans and advances were up 5% from KShs. 347.6Billion to KShs 364.5Billion during the period. This growth was largely driven by the Kenya business which registered an 8% growth. KCB’s loan portfolio is fairly diversified across sectors, reflecting the variety of the Kenyan economy and its buoyant private sector.
The devaluation of the South Sudan pound negatively impacted Group deposits leading to a 7% decline. However, KCB Bank Kenya Customer deposits had an impressive growth of 14% as a result of customers seeking to place their money where they felt safe.
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