In a display of remarkable resilience and strategic foresight, the Kenya Commercial Bank (KCB) Group has showcased impressive growth in its first-half financial results for the year ending June 30, 2023.
The leading banking institution reported a staggering 54% surge in total assets, soaring to KShs. 1.86 trillion.
The net profit, a testament to its sound financial strategies, culminated at KShs. 16.1 billion.
The pivotal driver behind this remarkable feat was the successful consolidation of Trust Merchant Bank (TMB), acquired in December 2022.
This strategic move, coupled with a surge in customer deposits that reached KShs. 1.47 trillion, solidified the unwavering trust customers place in the KCB brand.
The loan book witnessed a 32% surge, reaching KShs. 964.8 billion, reaffirming KCB’s dedication to nurturing businesses through financial support.
A notable contributor to this thriving performance was a commendable 22.2% growth in revenue, which scaled to KShs. 73.1 billion.
A combination of factors fueled this growth, including the expansion and consolidation of TMB, a surge in customer loans, and an impressive uptick in non-funded income (NFI).
The latter, propelled by surging fees, commissions, and the sustained growth of digital transactions, demonstrated the bank’s prowess in adapting to the digital age.
Despite the impressive numbers, the journey wasn’t without challenges.
The profit after tax was notably impacted by diligent provisioning on facilities in KCB Kenya, the integration of legal claims from National Bank of Kenya (NBK), and staff restructuring costs.
These endeavors were aimed at aligning the organizations to a more efficient structure and size.
Commenting on the results, KCB Group CEO Paul Russo acknowledged the challenging economic backdrop across their operating markets.
However, he underscored the resilience exhibited by the business, which continued to bolster its balance sheet and experienced increased contributions from regional businesses.
Russo acknowledged that profitability faced some pressure due to higher funding costs and prudent provisioning.
Russo’s strategic vision for the second half of the year revolves around accelerated performance and providing support to distressed customers.
This aligns with the bank’s historical commitment to its clientele and its undeterred pursuit of excellence.
Notable Performance Highlights
Regional Business Growth: The contribution from businesses outside Kenya experienced an impressive 166% surge, now accounting for 38.1% of the Group’s business. Profit before tax from these regional endeavors reached KShs. 8.5 billion.
Revenue Composition: Funded income witnessed a commendable 12.1% increase, reaching KShs. 45.5 billion, primarily due to loans and government securities growth. Non-funded income experienced a remarkable surge of 43.4%, scaling to KShs. 27.6 billion.
Operating Costs and Consolidation: Operating costs increased by 48%, primarily due to legacy legal claims, staff restructuring expenses, and the consolidation of TMB.
Asset Quality Enhancement: The Non-Performing Loan (NPL) ratio eased to 17.4%, indicating a notable improvement of 410 basis points from the previous year. This underlines the Group’s commitment to maintaining high asset quality standards.
The financial report also highlighted that KCB Group sustained healthy capital ratios, adhering to regulatory standards.
The core capital stood at 15%, significantly surpassing the statutory minimum of 10.5%, while the total capital to risk-weighted assets ratio reached 18.4% against a regulatory minimum of 14.5%.
KCB Group has not only excelled in financial prowess but has also made noteworthy strides in corporate developments.
The bank, in collaboration with the Swedish International Development Cooperation Agency (SIDA), introduced a KShs. 1 billion guarantee scheme, aimed at bolstering SMEs’ access to credit.
This initiative underlines KCB’s commitment to fostering SME growth.
KCB’s Africa-wide agreement with the Pan-African Payment and Settlement System (PAPSS) signifies its proactive stance in facilitating cross-border transactions, boosting intra-African trade and payments.
The bank’s strategic partnership with VISA and Thales is yet another move in enhancing customer convenience, allowing in-store payments through the KCB App via NFC-enabled smartphones.
As the financial institution continues to strengthen its customer value propositions, it’s evident that KCB Group’s commitment to meaningful transformation is unwavering.
Dr. Joseph Kinyua, KCB Group Chairman, affirms that the bank is well-positioned for future growth, leveraging its robust governance structures, digital capabilities, regional presence, and dedicated staff to make substantial contributions to economic progress.
To put it straight, KCB Group’s performance in the first half of 2023 stands as a testament to its resilience, adaptability, and commitment to financial excellence.
With a strategic outlook, unwavering dedication, and a customer-centric approach, the bank paves the way for a promising future in the financial landscape.
