KCB Group posts 5pc rise in net profit

KCB Group CEO & MD, Joshua Oigara (left), with, KCB Group Chairman, Andrew Wambari Kairu (centre) and KCB Group Chief Finance Officer, Lawrence Kimathi, during the 2019 Full Year Financial results announcements. [Wilberforce Okwiri, Standard]

KCB Group posted a 4.8 per cent rise of net profit in the year ended December 31, 2019, to Sh25.2 billion, up from the Sh23.9 billion it reported in 2018.

In the same period, the lender accrued a net interest income, the earnings gotten from levying of interests on loans, of Sh56.1 billion, up from Sh48.8 billion in 2018. Non-interest income also rose significantly to Sh28.2 billion in 2019, up from Sh22.9 billion in 2018.

KCB earnings were boosted by increased uptake of mobile loans and investments in digital channels. “During the year under review, the number of non-bank transactions increased to 97 per cent with a majority of them conducted via mobile devices. Mobile loans advanced increased to Sh212 billion from Sh54 billion in 2018,” said KCB Group Chief Executive Joshua Oigara.

“The cumulative disbursement via mobile over the past five years totalled to Sh319 billion. Enhanced investments in digital channels pushed non-funded income up 22.6 per cent to Sh28.2 billion from Sh23.0 billion in 2018.”

KCB shareholders enjoyed a return on equity of 20.7 per cent in 2019. Shareholders’ equity was up 14.1 per cent, from Sh113.7 billion to Sh129.7 billion.?

 Non-interest income

KCB’s newly-acquired subsidiary, National Bank of Kenya (NBK), was not as savvy, recording a net loss of Sh337 million over the same period. In the financial year ended December 31, 2018, the bank had registered a net profit of Sh156 million.

The NBK recorded a net interest income of Sh6.3 billion, up from Sh6 billion in 2018. Total non-interest income, however, dropped marginally to Sh2.06 billion from Sh2.12 billion in the same period in 2018.

KCB closed the year with a Sh899 billion asset value, an improvement from the Sh714 billion they recorded in the same period in 2018 - a 25.8 per cent increase. The bank’s total operating income rose by 17 per cent to Sh84.3 billion from Sh71.8 billion in 2018.

Mr Oigara said the lender had weathered tough economic conditions to remain resilient in the financial year as some of their numbers bettered 2018.

“The East African region continued to face various downside risks that ranged from adverse weather patterns to stress from currency fluctuations and the pressure from oil imports. All business lines were strong on both funded and non-funded income as cost control, operational efficiency and driving excellent customer experience remained a top priority,” he said.

He said the acquisition of NBK ‘solidified the group’s revenue base. However, NBK’s total asset dipped slightly to Sh112 billion from Sh115 billion recorded in 2018.

The bank, however, cut its non-performing loan book by 20 per cent.

“We spent the last quarter of the last financial year, following the acquisition, building a firm foundation for the bank’s recovery and takeoff. We have also been on an aggressive loan recovery drive. We are optimistic of a better year ahead,” said NBK Managing Director Paul Russo.