KCB Group Plc. posted a strong performance in the first half of the year, driven by improved economic activity, robust revenues, and lower provisions charge.
Profit after tax doubled to KShs.15.3 billion from KShs. 7.6 billion a year ago amid the effects of the ongoing COVID-19 pandemic.
Revenues increased by 14% on account of higher interest income driven by an increase in earning assets and lower cost of funding.
Key Financial Highlights
- Profit after Tax up 102% to KShs.15.3 billion from KShs.7.6 billion
- Assets stood at KShs. 1.02 trillion from KShs. 953 billion
- Customer Deposits increased 4% to KShs.786.03 billion from KShs.758.0B
- Loans grew 9% to close at KShs 606.9 billion.
Group CEO & MD Joshua Oigara said:
“We saw a strong first half of the year for the business with improved economic activity. The resilient and diversified nature of our business has helped us navigate the unfolding impact of the COVID-19 pandemic,” said KCB Group CEO & MD Joshua Oigara. “The business is well-positioned to catalyse the ongoing economic recovery as well as benefit from this resurgence,” he added.
Total income increased 13.7% to KShs.51.2 billion during the period, with net interest income up by 17.7% to KShs.36.6 billion from KShs.31.1 billion last year. This was on the back of higher interest earning assets and effective management of cost of funding during the period.
Operating costs were up by 7% on account of an increase in staff costs as the Group enforced cost management initiatives to ring-fence the business from the impact of the ongoing healthcare crisis.
Loan Provisions & Asset Quality
The cost of risk fell to 2.2% from 4.0%, with the ratio of non-performing loans (NPLs) at 14.3% from 13.7% in 2020. The stock of NPL closed the half at KShs.95.7 billion, from KShs.83.9 billion same period last year. Most of this increase occurred during the second half of last year, highlighting the strain on customers and their business because of the healthcare crisis.
Provisions for the period were down 40% to KShs.6.6 billion as the COVID-19 related impairments had been recognized in the full year 2020, and the facilities restructured to cushion customers from the impact of the pandemic.
The Group attained a historic milestone with the balance sheet closing the half at KShs.1.02 trillion, up from KShs.953 billion, a 7% jump.
Customer deposits were up by 4% to KShs.786.03 billion mainly due to current and savings accounts, while loans grew 9% on account of corporate term loans and retail check offs during the period to close at KShs 606.9 billion.
Shareholders’ equity grew 16% from KShs. 132 billion to KShs. 153 billion on improved profit for the period.
The Group maintained a solid capital position, with all key ratios well above the minimum regulatory requirement. The total capital for the Group stood at KShs 172.6 billion, representing a total capital to risk-weighted assets ratio of 21.8% against a regulatory minimum of 14.5%. The Group’s core capital as a proportion of total risk-weighted assets closed the period at 18.2% against the Central Bank of Kenya statutory minimum of 10.5%.
Outlook and Group Strategy
Despite the impact of the healthcare crisis, the Group is on track to achieve it’s three-year Beyond Banking Strategy which is anchored on delivering the very best in customer experience and driving a digital future.
“While the pandemic is still in our midst, the roll out of a vaccine globally has brought hope that the crisis will soon be under control. The resilience and providence of our concerted efforts to reinforce the sustainability of our business have enabled us to support and walk with our customers, staff and other stakeholders,” said KCB Group Chairman Andrew Kairu. “Looking forward, we believe we shall see the operating environment, and consequently our customer businesses continue to recover,” he added.
In line with the Group’s strategy and specifically to scale our regional presence, the Group is at the tail end of acquiring a majority stake in Banque Populaire du Rwanda PLC (BPR) and the African Banking Corporation Tanzania Limited (BancABC Tanzania) in Rwanda and Tanzania respectively. This transaction will bolster the Group’s market share in these two key markets and grow the contribution of international businesses to the Group.
Key Milestones – Global and Local accolades
In the period under review, KCB Bank was named Kenya’s Best Bank 2021 in the 2021 Euromoney global awards, cementing the Bank’s leadership position in the banking sector.
The Bank has also been awarded Africa’s Best Responsible Bank in the Euromoney Awards for Excellence. KCB Group was this month recognized by Global Finance Sustainable Finance Awards, bagging the Outstanding Leadership in Sustainable Loans in Africa category.
KCB has been feted as the Best Bank in Customer Experience in Kenya and the Most Innovative Banking Brand Kenya by the 2021 Global Brands Magazine Awards.
KCB Group Plc also scooped 15 awards during the 2021 Think Business Banking Awards. The Group’s subsidiaries, KCB Bank Kenya and National Bank of Kenya (NBK) won 11 and 4 awards, respectively, largely on digital banking, product marketing, product innovation and mortgage finance.