Partnerships lift KCB profit 18%

Increased partnership with the regional governments and other players from the private sector has seen KCB register 18.2% rise in pre-tax profits to stand at Kshs23.8 billion.

The bank which operates in six countries in the Eastern Africa region also notes political stability as well as dipping inflation rates as crucial in keeping the bank afloat in the last one year.

“The profit margins can be attributed to a vibrant human resource that has created a synergy in the workplace. Looking at the countries we operate in, we have seen reduced inflation, lower lending rates and higher remittances which have given businesses headroom to expand and ring-fence growth while making new investments. Going forward, we foresee stability across all economies where we operate despite the challenges in South Sudan,” says KCB Group chairman Ngeny Biwott.

The bank’s diversification of products which has seen it partner with Safaricom to launch Biashara Smart, a product that aims at building capacity among businesspeople, has seen it grow it market portfolio, banking on Safaricom’s network to market some of its products. So far 100,000 customers are using the Biashara Smart product.

“We have continually focused on investment in innovation and technology, tapping alternative channels such as KCB Mtaani agents, merchants, M-Benki, as well as Pepea, a cash-light card that enables commuters pay bus fare using the card as opposed to carrying cash around,” noted KCB Group CEO Joshua Oigara.

In 2014, the bank’s total operating income rose by 16% to Kshs56 billion, much faster than costs, riding on a sharp growth in fees and commissions which were up 21% to Kshs12.7 billion. Income from foreign exchange trading rose 12% from Kshs3.7 billion to Kshs4.2 billion. The lender also recorded 9% rise in net interest income to stand at Kshs35.9 billion, up from Kshs33billion recorded in 2013.

Net loans and advances rose 24.6% from Kshs227.72 billion to Kshs283.7 billion supported by a steady credit appetite. The level of Non-Performing Loans eased from 8.1% to 6.3% during the period under review. The bank recorded increased recoveries of what had been previously classified as bad debt in key sectors such as agriculture, building, trade, transport, real estate and households, helping drive growth. KCB is planning to capitalise on partnerships to help drive its financial inclusion agenda.

“For us, such partnerships are meant to make financial services more accessible to the general population. This is a crucial part of our effort to make serious progress in addressing the deep poverty experienced by millions of citizens across the East African region and beyond, many of whom remain outside the formal financial system,” said Mr Oigara.

The bank has struck major deals with the government to help diversify its products. It has already been given a nod by the National Treasury to launch Islamic Banking and its Sharia Compliant products in the country. It has also entered into a partnership with the government to aid the disbursement of over Kshs30 billion under the social protection programme for the aged, poor and disabled using a biometric card, Inua Jamii. The bank is planning to channel Kshs238 million of its pre-tax profit to the KCB Foundation to continue supporting its corporate social responsibility activities. There are also plans to grow the bank’s customer base to hit 10 million in the next few years.

“We want to continue building on partnerships with telecommunication, transport and governments across the region to help us grow and increase our loan book by 20% in the next two years,” remarked Oigara.