KCB Group PLC has announced a historic milestone with a 69% increase in net profit for the first quarter of 2024, reaching KShs. 16.5 billion, up from KShs. 9.8 billion in the same period last year. This impressive performance reaffirms KCB’s position as East Africa’s most profitable bank and the largest lender by assets.
Financial Performance Highlights
KCB’s total assets surged by 22.4% to KShs. 2.0 trillion, compared to KShs. 1.6 trillion in Q1 2023, supported by a 25.4% increase in customer deposits, which now total KShs. 1.5 trillion. The group’s total revenues grew by 31.6% to KShs. 48.5 billion, driven by both funded and non-funded income. Non-funded income, comprising 36% of total revenues, was bolstered by increased transaction volumes and customer confidence in KCB’s digital banking and alternative channels.
Paul Russo, KCB Group Chief Executive Officer, commented on the results, stating, “Despite a difficult operating environment across the region, we saw a strong revenue performance in the business as we entrenched prudent credit, liquidity, cost, and overall risk management. Consumer deposits continued to grow, a show of confidence that our clients have in the brand. Our deliberate investments in digital and payments capabilities as well as regional expansion approach continued to deliver impressive results.”
Operational Efficiency and Strategic Investments
KCB’s focus on operational efficiency was evident as the cost-to-income ratio improved to 43.3% from 51.2%. Total costs increased by 11.3% to KShs. 21.0 billion, driven largely by inflationary pressures. The group’s loan impairment charge rose by 53.4% due to downgrades in Kenya and the impact of foreign currency translations, resulting in a non-performing loan (NPL) ratio of 18.2%.
Russo highlighted the group’s strategic initiatives, saying, “We continued to leverage Group capabilities through syndication of facilities and tapping on centres of excellence to drive operational efficiency. Under our shared services model, we prioritized automation of key processes, roll out of more products on our self-serve channels and review of loan application processes continued to drive customer obsession and reduce friction. Looking ahead, we are upbeat about the prospects in all the markets we operate in.”
Strong Capital Position and Shareholder Value
KCB maintained a robust capital profile, with core capital as a proportion of total risk-weighted assets at 15.7%, well above the statutory minimum of 10.5%. The total capital to risk-weighted assets ratio stood at 17.8%, surpassing the regulatory minimum of 14.5%. Shareholders’ funds increased by 11% to KShs. 238.6 billion, reflecting a return on equity up from 19.7% to 28.6%.
KCB Group Chairman Dr. Joseph Kinyua expressed optimism for the future, stating, “We are optimistic of the business prospects in the remaining part of the year, compared to last year. We have made tangible progress to sustain superior shareholder value by delivering strong financial performance while driving our agenda to build a future-proof business. Prudent deployment of our capital has ensured that we were able to remain resilient and deliver for our stakeholders.”
Recent Corporate Developments
- In January, KCB launched its new three-year strategy (2024-2026), “Transforming Today Together,” focused on unlocking value for stakeholders in innovative and socially responsible ways.
- In February, KCB Bank Kenya and MasterCard signed a 5-year collaboration to enhance payment solutions across East Africa. KCB also partnered with Visa to introduce exclusive premium cards.
- In March, KCB Group and Access Bank PLC signed a binding offer for the acquisition of National Bank of Kenya Limited.
- KCB deepened its commitment to sustainability and ESG priorities, supporting 14 Sustainable Development Goals and positioning itself as a leading green financier.
- KCB invested KShs. 195 million in the World Rally Championship Safari Rally and KShs. 65 million in the 2024 KCB East Africa Golf Tour.
- This month, KCB was listed among Kenya’s top 3 most valuable brands by Brand Finance and received multiple awards for its contributions to East Africa’s economic transformation.
With these strategic moves and strong financial performance, KCB Group PLC continues to solidify its leadership position in East Africa’s banking sector, driving growth and delivering value for its stakeholders.