Founded in Kenya in 1896 KCB Bank Group has posted an 18% rise in full year 2014 pre-tax profit, riding on double-digit growth in balance sheet and non-funded income and all subsidiaries returning positive earnings.
The Bank Group with over 244 branches, 962 ATMs and 10,102 agents in East Africa says during the 12 months ending December 2014, its profit before tax jumped from KShs 20.12 billion to KShs 23.79 billion due to improved macro-economic indicators with most economies posting better growth figures, reduced inflation, lower lending rates and higher remittances.
During an Investor Briefing held in Nairobi KCB Group Chairman, Mr. Ngeny Biwott said, “This coupled with relative political stability has given businesses headroom to expand and ring-fence growth while making new investments. Going forward, we foresee stability across all economies where we operate despite the challenges in South Sudan.”
The Bank’s total operating income rose 16% to KShs. 56.0 Billion, much faster than costs, riding on a sharp growth in fees and commissions which were up 21% to KShs. 12.7 Billion. Income from foreign exchange trading rose 12% from KShs 3.7 Billion to KShs 4.2 Billion.
“These impressive results are attributed to a double digit growth in our balance sheet as a result of growth in loans and advances,” said KCB Group Chief Executive Officer, Mr. Joshua Oigara.
“We have continually focused on investment in innovation and technology, tapping alternative channels (KCB Mtaani agents, merchants, M-Benki, pepea transit card) and improving operational efficiency to boost growth. Going forward, these will remain on our radar screen,” said Mr Oigara.
The Bank’s net Interest Income was up 9.0% from KShs 33.0 Billion to KShs 35.9 Billion while net loans and advances rose 24.6% from KShs 227.72 Billion to KShs 283.7 Billion supported by a steady credit appetite.
The Bank’s newly created Bancassurance business saw profits rise by 268% year-on-year from KShs 42.2 Million during the full year 2013 to KShs 155.2 Million in 2014.
The level of Non-Performing Loans eased from 8.1% to 6.3% during the period under review. The Bank recorded increased recoveries of what had been previously classified as bad debt in key sectors such as agriculture, building, trade, transport, real estate and households, helping drive growth.
The Group has recently rolled out M-Benki and [email protected] (together with Safaricom), which are based on mobile phone technology.
The Bank continues to remain strong on all prudential ratios with core capital to total risk weighted at 17.1% (Revised CBK minimum-10.5%), total capital to total risk weighted assets at 21% (Revised CBK minimum-14.5%), core capital to total deposits at 20.9% (Revised CBK minimum-10.5%) and liquidity ratio at 31.3% (CBK minimum-20%).
This year and beyond, the Bank is planning to boost its investment in new business lines, revving up growth in its subsidiaries and expanding its foray in the cashlite economy which is billed as the next frontier for growth in the financial services sector. The Safaricom partnership is a landmark engagement that will drive the innovation space to a whole new level in supporting the digital payments agenda.
“We are working on scaling up our investment in KCB Capital and Bancassurance, improving efficiencies and consolidation as well as focusing more on growing the business in Uganda, Tanzania, Rwanda, Burundi and South Sudan” said Mr Biwott.
Two weeks ago, Kenya’s National Treasury gave KCB Group the necessary approvals to launch Islamic Banking and its Sharia Compliant products, marking another milestone in the Bank’s roll-out of Islamic banking services in Kenya. In South Sudan, KCB is facilitating non-oil revenue collection for the government.
Last month, the Bank entered into an agreement with the Kenyan government to aid the disbursement of over KShs 30Billion under the social protection programme for the aged, poor and disabled using a biometric card, Inua Jamii. This came barely two months after the Bank launched its Pepea Commuter Card used by travellers to pay for their transport fare as well as conduct other transactions.
KCB’s share continued in its strong performance in 2014 with a total return of 25.8% against the NSE 20 share index, outperforming the index by 8.9%. The share price achieved a high of KShs 62.00 in the course of the year, settling to close at KShs 57.00 having started trading in 2014 at KShs 47.75. Stock turnover for the year was over KShs. 31 billion representing the second most liquid stock on the exchange.
Mr Biwott said that KCB will contribute 1% of its Group pre- tax profits to the KCB Foundation translating to KShs. 238 Million. These funds will facilitate the Foundation to support community initiatives in education, environment, enterprise development, health and humanitarian intervention for the year 2015.