KCB Group Chairman, Mr. Ngeny Biwott, today announced the Bank’s half-year trading results reflecting a pretax profit of KShs11.7bn, a 16% increase from KShs 10.1bn for the same period in 2013, and commented:
“This is a very good performance which compares well with the same period last year and shows an impressive growth trend year-on-year over the past few years. The pretax profit we have announced is very much in line with our projections and is sustainable going into the future.
This strong performance underlines the momentum of our strategy to drive business growth and underpins the confidence that our customers have shown in the business in the recent past.”
“This good performance also comes at a time when KCB has just been awarded ‘Best Bank in Kenya’ by Euromoney. This prestigious recognition is a very positive reflection on the significant progress that we have made over the past few years to grow our business in the East African Region through innovation, partnerships and new business lines,” said the Group Chairman.
The Global Credit Rating (GCR) also affirmed the national scale ratings assigned to KCB of AA and A1+in the long term and short term respectively with the outlook accorded as stable.
Despite the setbacks in South Sudan, overall the International Business reported improved performance. In the month of August, two additional branches will be opened in Juba as business now starts to pick up in the country. The international business contributed 7.3% to the Group profits and we are planning to roll out mobile banking and agency services to the subsidiaries in the next quarter.
The Group Chief Executive, Mr. Joshua Oigara said, “The half year performance shows good growth in revenue across the business with net interest income up by 7% from KShs 16.05bn in June 2013 to KShs 17.13bn this year. Foreign exchange income also leaped by 25% from KShs 1.78bn during the same period in June 2013 to KShs 2.22bn this year following increased marketing activity for our foreign exchange business. Fees and commissions also went up by 13% from KShs 5.04bn in June 2013 to KShs 5.67bn this year following increased usage of our alternative channels such as M-Benki, agency banking and strategic partnerships.”
Recently, KCB and Safaricom signed an SME partnership deal that will allow over 1 million micro and SME businesses to effectively use technology to streamline theiroperations and at the same time open up new possibilities for them for expansion and growth through Biashara@smart. This journey will revolutionize the SME sector and enable them as entrepreneurs to scale up their growth on a one-stop-solution platform using the mobile phones.
We have also witnessed growth in our Bancassurance business and it continues to exhibit potential that is progressive, said Mr. Oigara.
The Bancassurance profits grew by 482.7% (year on year growth) from KShs. 21.4mn during the second quarter of 2013 to KShs. 124.9mn during the same period in 2014. Fees and commissions now stand at KShs. 102.6mn in the second quarter of 2014 against fees and commissions of KShs. 34.1mn in the same period in 2013. Total Assets for Bancassurance grew by 284% from KShs. 68.4mn to KShs. 263.2mn.
“Our operating expenses grew by 16% from KShs 11.69bn in June 2013 to KShs 13.62bn in June 2014 attributed to operating expenses relating to the ongoing upgrade in IT, and managing the additional business that is coming into the bank. However we have been encouraged with the reduction in our cost to income ratio from 51.0% to 49.6% during the six months, a 140 basis points improvement that is within industry norms,” said the Group Chief Executive.
The Bank’s balance sheet grew by 19% from KShs 370.91bn in the first half of June 2013 to KShs 439.70bn this year, the largest in the region. Net loans and advances grew by 14% from KShs 214.09bn in the previous quarter of June 2013 to KShs 244.01bn this year following increased lending to the micro and small and medium enterprises in the economy. The Bank’s investment in government securities was modest with a 6% increase from KShs 88.21bn in June 2013 to KShs 93.33bn in June 2014.
Following the successful tapping oflong term debt from IFC and Ghana International Bank that brought in an additional USD 70mn, KCB continues to enjoy strong capital ratios and is in a position to take additional deposits and increase the asset book significantly. The funds will enable KCB to lend to SMEs and foreign currency mortgages.
The Bank continues to remain strong on all prudential ratios with core capital to total risk weighted at 15.9% (Revised CBK minimum-10.5%), total capital to total risk weighted assets at 20.7% (Revised CBK minimum-14.5%), core capital to total risk depositsat 16.8% (Revised CBK minimum-10.5%) and liquidity ratio at 40.9% (CBK minimum-20%). The Bank has an excess capital of KShs 18.1bn over minimum requirements to fund its growth.
KCB shares at Nairobi Securities Exchange (NSE) have increased from KShs 47.25 at the beginning of 2014 to close in June at KShs 51. KCB was amongst the most liquid counters with a turnover of KShs 14.9bn year to date ranking it second on the FTSE NSE Kenya 25 Index.
He concluded: “This is an impressive result for us and a good reflection of the strategic initiatives the bank has been undertaking. We are confident that we are implementing the right strategies to ensure continued growth and would like to assure the investor community that there is good momentum on all our six initiatives that reflect growth opportunities. We shall continue to prudently grow the business and increase shareholder value.”