KCB profit hits Sh41bn on increase in income

KCB Group's net profit grew 19.5 per cent to Sh40.8 billion in the financial year that ended December on increased interest and non-interest income.

The rise in net profit from Sh34.2 billion realised in the previous year was buoyed by increased interest and non-interest income during the review period.

“The strong performance for the year was as a result of our business strategy that is anchored on customer obsession, sharper execution, and a productive organizational culture,” KCB Group chief executive officer Paul Russo said.

“The business benefited from a vibrant core banking business, growth of new business lines, and accelerated digital transformation to post this record performance” he added.

Customer loans increased by 27.8 per cent to Sh863 billion from additional lending in the Kenya business, increased lending in the international businesses, and the acquisition of DRC Congo’s Trust Merchant Bank (TMB).

The growth in the bank's loan book saw the net interest income increase by 11.5 per cent to Sh86.65 billion. Non-funded income grew by 39.8 per cent to Sh43.25 billion largely from trade finance income, lending fees, and commissions.

Operating expenses however rose from Sh60.82 billion to Sh72.6 billion on the back of increased staff costs and provisioning for loan defaults.

Staff costs grew by 22.5 per cent to Sh30.26 billion, partly on costs of running TMB while provisions for loan defaults rose by 2.3 per cent to Sh13.2 billion. The ratio of non-performing loans stood at 17.3 per cent.

Assets growth

KCB’s total assets grew by 36.4 per cent to Sh1.55 trillion, helped by increased lending, and investment in government securities as well as growth in customer deposits and additional borrowings. Despite the increased net profit, the lender’s board is proposing a final payout of Sh1 per share—being equal to January’s interim payout of Sh1— bringing the total payout to Sh2 per share amounting to Sh6.4 billion.

The payout represents a 33 per cent cut from the Sh9.64 billion that was paid on the previous year's performance when the net profit was Sh34.2 billion. The latest distribution to shareholders translates to 15.7 per cent of the net earnings.

KCB has linked the dividends cut to regional expansion costs, including the mid-December acquisition of an 85 per cent stake in TMB in a transaction that cost it an estimated Sh17.9 billion.

“We have made significant investments in our regional expansion strategy among them, our latest entry into DRC through TMB bank. These investments are key to accelerating our future growth and commitment to delivering shareholder value,” said Andrew Wambari Kairu, KCB Group chairman.

The final dividend will be payable to the members of the company on the share register at the close of business on April 6, if approved by shareholders.