KCB Group PLC has reported net earnings of Ksh19.6 billion for the six months ending June 30, 2022, a 28.4 percent rise from a similar period in 2021.
The growth from Ksh15.3 billion was driven by improvement in both the funded and non-funded income streams. Additionally, the international subsidiaries increased their overall contribution to the Group’s performance.
Total operating income increased by 16.8 percent mainly driven by a 29.9 percent growth in non-funded income. Group businesses increased their profit contribution to 16.8 percent driven by new business growth and the impact of BPR Bank.
“We delivered solid results, supported by our diversified business model as we sharpened our focus on customer obsession and executįon to better support our customers in a rather difficult operating environment. Despite some uncertainties and headwinds, we saw sustained signs of recovery across the region, allowing us to deliver stronger shareholder value,” said KCB Group CEO Paul Russo.
Revenues went up 16.8 percent to Ksh9.8 billion from Ksh51.2 billion
Costs went up by 20.3 percent to Ksh27.3 billion from Ksh22.7 billion while total assets stood at Ksh1.21 trillion, up 18.4 percent.
Net loans and advances surged 20.2 percent to Ksh730.3 billion from organic growth and strategic acquisitions.
Customer deposits increased to Ksh908.6 billion, a 15.6 percent rise.
Financial Performance
Interest income grew by 15.7 percent to Ksh54.5 billion mainly driven by a 31.5 percent growth in income from government securities. This was partially offset by a 30.3 percent increase in interest expense as cost of funding marginally increased during the period. Net interest income increased by 11.5 percent to Ksh40.6 billion.
The 29.9 percent jump in non-funded income was driven by lending fees, services fees – on account of increased activity especially in trade finance and foreign exchange income.
Digital channels maintained 98 percent level of transactions by number performed outside the branches. Mobile lending values were up 23 percent to Ksh91 billion while total values transacted on the mobile were up 22 percent to Ksh1.28 trillion. The values transacted on internet banking and merchant/POS terminals were up 102 percent and 50 percent respectively.
This performance boosted the Group NFI ratio to 32.1 percent compared to 28.9 percent achieved in the previous year.
Provisions decreased 34.4 percent largely due to a drop in corporate and digital lending impairment charge. Appropriate IFRS 9 staging in prior years had already recognized associated impairment.
Operating costs went up by 20.3 percent on consolidation of BPR Bank in Rwanda, increased spend on customer acquisition initiatives, investment in technology and higher staff costs. This increase drove up the Group cost to income ratio to 45.7 percent. The Group is confident that once these transition-related activities are concluded, the cost-to-income ratio will reduce to below 44 percent.
Total assets stood at Ksh1.21 trillion for the period, up 18.4 pewrcent on additional lending, deposits growth and the consolidation of BPR subsidiary. Customer loans increased by 20.2 percent to Ksh730 billion from new disbursements across the Group while customer deposits grew to Ksh909 billion, up by 15.6 percent from the previous year.
Shareholders’ funds grew by 17.1 percent to Ksh179.1 billion on improved profitability for the period.
The Group capital buffers remained well above the regulatory requirement with core capital as a proportion of total risk-weighted assets standing at 17.7 percent against the statutory minimum of 10.5 percent. Total capital to risk-weighted assets ratio was at 21.6 percent against a regulatory minimum of 14.5 percent.
“Looking ahead, we remain confident of a stronger second half and an economic turnaround across the region. We remain focused on delivering on business growth while at the same time continuously building a socially responsible and sustainable business,” said KCB Group Chairman Andrew Wambari Kairu.
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