Growth driven by diversified business lines, operational efficiencies, non-funded incomes and higher contribution from subsidiaries.
KCB Group Limited posted a 16% increase in profit after tax for the 12 months ending December 2015 on the back of higher net interest income, non-funded income and operational efficiencies.
Post Tax earnings hit KShshs.19.6 billion during the period, up from KShs 16.8 billion in 2014 with the contribution from KCB’s international business rising to 12.8% up from 8.3% the previous year.
Key Performance Highlights:
Total Assets: Up 14% from KShs 490.34bn to KShs558bn
Net Loans and Advances: Up 22% from KShs 284bn to KSh346bn
Customer deposits: Up 12% from KShs 377.27bn to KSh424.4bn
Shareholder Funds: Up 7% from KShs 75.63bn to KSh81bn
Long term debt funding: Up 58% from 12.73bn to KSh20bn
Profit After Tax: Up 16% from KShs 16.8B to KSh19.6B
Net Interest Income: Up 9% from KShs 35.95bn to KSh39.2bn
Fees and commissions: Up 11% from KShs 12.74bn to KShs14.16bn
KCB Group Chairman Ngeny Biwott said the improved earnings were as a result of sustained business resilience despite a relatively tough macro-economic environment across the East African region.
“Overall, the business navigated through difficult times especially in Kenya during the second half of the year as well as Burundi and South Sudan. Our multiple market presence helped balance off the pressures and push up the Group’s earnings,” said Mr Biwott. “The robust business model we have adopted for the International Business is gaining momentum and underpins our regional expansion strategy. We will invest more on initiatives that support deepening financial inclusion across East Africa region and beyond to guarantee a more sustainable business into the future.”
The financials show that net interest income rose by 9% to KShs 39.2 Billion due to a sharp growth in the asset book while fees and commissions jumped11%, to KShs14.16 Billion, attributable to increased transactions volumes and new products rolled out to meet customer needs.
“We have continually made deliberate investments and focus on building a business around diversification, prudent cost management, a robust IT system while remaining synonymous with excellence in customer experience at all service points across the Group,” said KCB Group CEO Joshua Oigara while announcing the result. “Going into the future, we believe that the pace and trajectory of our growth as a business will largely be determined by our efforts in improving operational efficiencies and deepening digital payments while exploiting our network spread to enhance service excellence,” said Mr Oigara.
KCB has in the last one year been able to develop superior expertise in micro lending, through a strategic partnership and product innovation with Safaricom, the mobile company. Latest Bank statistics show the Bank disbursed over KShs 7Billion in loans to over 5 million KCB-Mpesa customers, instantly on their mobile phones. “We have revolutionalised lending through KCB Mpesa. Lending has never been easier and faster than it is today because of this technology that allows customers to access funds instantly on their mobile phones and we see this as a key cog in our growth story,” said Mr Oigara.
This saw the Group surpass the 10 million customer mark, marking a major milestone, as it set up a Representative Office in Ethiopia to deepen the regional presence.
During the period under review, the Bank handled KSh31 billion in agency transactions up from KShs 14 billion in 2014. At least 21.6 million transactions were handled through mobile phones, compared to 10.9 million the previous year. Agency transactions hit 7.5 million from 3.2 million in 2014, a 134 % rise.
The financials paint a picture of a business with solid profitability and performance matrices—a strong regional franchise, capital buffers, a well-structured deposit-based funding model and high level of liquid assets. The Group’s balance sheet hit Ksh558 Billion, a 14 % growth, giving the lender the much needed muscle to run a stronger regional business while taking up bigger projects across East Africa and beyond. The growth in the balance sheet was boosted by a 22% growth in loans and advances while balances with other financial institutions rose by 40%.
Total liabilities and Equity increased by 14 % due to 12 % growth in customer deposits, supported by an increase in customer numbers and product base. Shareholders’ funds were up 7% while borrowed funds increased by 58% due to additional funding during the year to ease liquidity.
For the period ending December 2015, the Bank maintained a strong show on all prudential ratios with core capital to total risk weighted assets at 14.1% (CBK minimum-10.5%), total capital to total risk weighted assets at 15.4% (CBK minimum-14.5%) and core capital to total deposits at 16.1% (CBK minimum-8%).
KCB through its seven operations—Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan and Ethiopia (representative office) —operates as a diversified financial services provider, and is active across the East African region, targeting both retail and wholesale customer segments. The Bank has been positioning itself as a continental lender, seeking to take up bigger infrastructure projects in Africa, with a plan to be present in at least 10 markets by 2020. KCB is eying entry into Somalia, Mozambique and the Democratic Republic of Congo among other countries.