KCB Group half-year profit jumps 13 per cent to hit Sh13.2 billion

NAIROBI: Kenya Commercial Bank Group's profit before tax shot up 13 per cent to Sh13.2 billion for the period ending June 30, 2015, compared to Sh11.7 billion made over a similar period last year.

This performance was driven by robust growth in new businesses, especially a shift to digital platforms where over 60 per cent of KCB's transactions now take place.

KCB's improved performance is happening against the backdrop of a rapidly changing macroeconomic environment that has seen Central Bank of Kenya (CBK) pursue a tight monetary policy stance with interbank, Central Bank Rate(CBR) and Kenya Bankers Reference Rate(KBRR) increasing.

Group Chief Executive Joshua Oigara said tightening of the liquidity situation has seen cost of borrowing go up for customers. With a rise in the KBRR, this gives us an opportunity to re-price our loan products.

"While we are experiencing an increase in cost of funds, we are confident about Kenya's strong economic fundamentals as shown by the prevailing fiscal and monetary policy environment," he said during the presentation of the group's financial performance for the first six months of 2015 in Nairobi Thursday.

Although KCB has had challenges in South Sudan, it maintains it is not about to shut down in this market as there is nothing in the horizon to suggest that it should.

"We had a relatively tough macro-economic and political environment in most of the markets the bank operates. In South Sudan and Burundi, we had economic shocks due to political tensions. Uganda, Kenya and Tanzania were hit by currency depreciation and high inflation while Rwanda was relatively stable" added KCB Group Chairman Ngeny Biwott.

"We see a brighter outlook in terms of the bank's growth trajectory in the coming years across all the markets," he said. KCB's total assets figure was up 29 per cent from Sh440 billion to Sh567 billion while net loans and advances were up 31 per cent from Sh244 billion to Sh321 billion.

"Net loans and advances, which constitute the highest proportion of the Bank's assets at 57 per cent, have been the biggest contributor to the bank's balance sheet growth," said KCB Group Chief Finance Officer Lawrence Kiambi.

KCB's assets base now stands at Sh567 billion, the biggest balance sheet in the East African banking sector. Customer deposits rose 26 per cent from Sh352 billion to Sh443 billion while fees and commissions were up 21 per cent from Sh5.7 billion to Sh6.8 billion.

The bank is eyeing the digital space and its partnership with M-pesa platform and increased funding to small and medium enterprises, to drive its growth going forward.