Kenya’s largest bank by assets KCB Group Plc has reported a 7.5% pretax profit for the financial year 2019 to 36.73 billion shillings. KCB grew both its net interest income and income from transaction commissions and other lines last year. Earnings per share at the group, which also operates in neighboring Uganda, Tanzania, Rwanda, Burundi and South Sudan, increased to 8.11 shillings during the period, from 7.83 shillings a year earlier.
Key Highlights:
- Net Profit – Up 5% to KShs.25.2B from KShs 24.0B
- Total Operating Income- Up 17% from KShs.71.8B to KShs.84.3B
- Operating Expenses (excl provisions)- up 10.0% from KShs.35.0B to KShs. 38.5B.
- Cost to Income Ratio (excl. provisions) – 45.7%
- Cost of Funds- 2.8% from 3.2%
- Non Funded Income 33.4% from 32%
- Return on Equity -20.7%
- NPL Coverage- (IFRS)- 72.1% from 68.6%
- Liquidity Ratio- 37.1% from 33.3%
Business remained resilient despite the challenging economic conditions witnessed in the various markets and the wider global economy – Joshua Oigara
The Group has announced a 4.9 per cent growth in profit after tax for the period ending on December 31, 2019 to Ksh.25.2 billion.
KCB higher earnings have continued to be supported by non-interest funded income (NFI) streams which grew by 22.8 percent to Ksh.28.2 billion on the back of higher fees and commissions on customer loans and advances. Customer deposits meanwhile grew to Ksh.686.6 billion from Ksh.537.5 billion
Interest income meanwhile grew by 12.2 percent to Ksh.74.4 billion on the back of higher earnings from loan issuance and investments in government securities as issued loans topped Ksh.535.4 billion from Ksh.455.9 billion in 2018.
Total assets surged 26% to KShs.899 billion from KShs. 714 billion in 2018. The key drivers for this growth were the loan book growth of 17 % to KShs 535.4 billion— reflecting the strong lending pipeline primarily driven by retail and corporate banking customer segment—and the customer deposits growth of 28% to KShs. 686.6 billion. The main driver for this growth was acquisition of NBK
Overall, the business continued to generate good returns for its shareholders averaging a return on equity of 20.7% in 2019. Shareholders’ equity was up 14.1% from KShs113.7 billion to KShs.129.7 billion. KCB distributed part of the profit by way of an interim dividend of KShs 1.0 per share in the course of 2019. The KCB Group Board has proposed a final dividend of KShs. 2.5 per share to be presented to shareholders in the Annual General Meeting to be held in May this year.
All banking subsidiaries met regulatory capital requirement with the exception of NBK which was below total capital requirement. This is expected to be addressed within the first half of 2020 through various initiatives at NBK. The Group’s core capital as a proportion of total risk weighted assets closed the period at 17.2% against the Central Bank of Kenya statutory minimum of 10.5%. Total capital to risk-weighted assets stood at 19.0% against a regulatory minimum of 14.5%.
Going forward, the business outlook for the year remains positive, with significant gains expected following the removal of the cap on interest rates in November 2019.
KCB’s recently acquired subsidiary in the National Bank of Kenya (NBK) has however made strides in the opposite direction in the reporting a Ksh.302.3 million loss over the period from a narrow Ksh.7 million profit in 2018.
