KCB profits up 18% in first half of 2018

JOSHUA OIGARA_GROUP CEO & MD KENYA and KCB_GROUP CFO,-LAWRENCE KIMATHI in a blue suit during the half year results announcements./Michael Mbugua

Kenya Commercial Bank KCB has announced a net profit of 12.1 billion after tax for the first six months of 2018 which represent 18 percent growth.

While releasing the financial results on Thursday, KCB Group CEO and Managing Director, Joshua Oigara, said the business was resilient in a rough operating environment further complicated by credit tightness in key Market.

“We are on track to delivering on our 2018 targets on the six strategic initiatives. We are seeing a more robust business that is responsive to our model of boosting non-funded activity, improving our financial strength and prudent management to consistently deliver stronger shareholder value,” said Oigara.

According to the financials, total income was up 3% to shs.35.6 billion from shs.34.6 billion, riding on a surge in both interest and non-interest income. The contribution of non-funded income at 32.3% of the total revenues was in line with the Group’s agenda to deliver at least 40% of the income from digital financial services by the year 2020.

Comparatively, operating expenses Declined 7% to KShs.18.5 billion from KShs.19.9 billion attributable to improved staff costs and loan loss provisioning.

In line with the digital transformation strategy, transactional activity continued to shift away from branches, with non-branch transactions (mobile, agency banking, point of sale terminals and ATMs) standing at 87% of total volumes, compared to 13% handled at the branches.

During the period, KCB balance sheet grew by 6% to Shs.667.7 billion from Shs.630.6 billion, driven by higher deposits and gross customer loans in an environment of controlled interest rates. Deposits hitShs.525 billion from KShs.482.8 billion, a 9% jump, resulting in an improved liquidity position. The loan book expanded 4% to Shs.421.5 billion.

KCB group continues to focus on improving credit quality, non-performing loans ratio improved by 130 basis points from March 2018 to settle at 8.5% as at June 2018 as Retained earnings grew by Shs.12.5 billion to close at Shs.73 billion.

KCB Group Plc’s capital base remained strong and above regulatory and internal targets. The Group’s core capital as a proportion of its total risk weighted assets closed the period at 15.7% representing a 520-basis point buffer on the Central Bank of Kenya statutory minimum.

Overall, the Group’s total capital as a proportion of its risk-weighted assets stood at 17.2% against a regulatory target of 14.5%. During the quarter, Fitch Ratings Agency assigned KCB Group Plc and KCB Bank Kenya Limited long-term issuer ratings of B+ with stable outlooks, both in line with the Sovereign rating.

Shareholders are to be paid the dividend in November 2018.