KCB Group PLC has announced a record profit after tax of KES 40.8 billion for the full year ending December 2022.
This represents a 19.5% increase in profitability from the KES 34.2 billion recorded in the previous year.
The bank’s CEO, Paul Russo, attributed the strong performance to the company’s business strategy that is anchored on customer obsession, sharper execution, and a productive organizational culture.
“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 organisation culture. The business benefited from a vibrant core banking business, growth of new business lines and accelerated digital transformation to post this record performance”, said Russo.
“Overall, we have positive momentum, and we shall build on this and ensure that we make significant step change in culture and performance, across all our business units. Despite a challenging operating environment, the belief in our people, enhanced digital capabilities, impetus in our regional businesses and successful integration of Trust Merchant Bank (TMB)—our latest subsidiary in the Democratic Republic of Congo— makes a good case for better performance” he added.
Revenues for the year increased by 19.6% to KES 129.9 billion, driven by net interest income which grew by 11.5%, supported by earning assets and partially offset by an increase in interest expenses from higher costs of borrowing and interbank market rates. Non-funded income grew 39.8%, largely from trade finance income, lending fees, and commissions.
Costs were up 24.1% compared to the previous year due to increased business activities and the impact of BPR and TMB acquisitions. Provisions increased marginally by 1.7% compared to the previous year, reflecting the appropriateness in IFRS9 staging done in prior years.
On asset quality, the ratio of non-performing loans (NPL) stood at 17.3%, largely driven by downgrades from the KCB Kenya business. Gross NPLs stood at KES 161.2 billion. Although both the NPL ratio and stock show an increase compared to the previous year, there is a remarkable reduction from the peak numbers in June 2022.
Total assets stood at KES 1.55 trillion, growing 36.4% on higher loans and investment in government securities and funded by growth in customer deposits and additional borrowings. Customer loans increased by 27.8% to KES 863 billion from additional lending in the Kenya business, increased lending in the international businesses, and the acquisition of TMB. Comparatively, customer deposits hit the trillion shillings mark, increasing by 35.6% to KES 1.135 trillion, mainly from TMB and organic growth in the existing businesses.
Shareholders’ funds grew by 18.9% from KES 173.5 billion to KES 206.3 billion on improved and accumulated profits for the year to date. KCB Group’s capital base remained well within both internal and regulatory limits, with core capital as a proportion of total risk-weighted assets standing at 13.9% against the statutory minimum of 10.5%, and total capital to risk-weighted assets ratio at 17.1% against a regulatory minimum of 14.5%.
The Board has proposed a final dividend payout of KES 1.00 per share, subject to shareholder approval, in addition to an interim payout of KES 1.00 per share paid out in January 2023. This brings the total dividend payout for the year to KES 6.4 billion.
KCB Group Chairman Andrew Wambari Kairu emphasized the company’s significant investments in its regional expansion strategy, including the latest entry into the DRC through the acquisition of 85% of TMB. He stated that the investments made are key to accelerating the company’s future growth and commitment to delivering sustainable shareholder value.
“We have made significant investments in our regional expansion strategy among them, our latest entry into DRC through the acquisition of 85% of TMB. The investments made are key to accelerating our future growth and commitment to delivering sustainable shareholder value,” he said.
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