RIDING ON TECHNOLOGY

Digital banking drive KCB's Q3 profit to Sh19.2 billion

BANKING STILL AMONG MOST PROFITABLE BUSINESSES

In Summary

•KCB Group CEO Joshua Oigara said the bank had taken measures to reduce costs leading to one per cent reduction in operating expenses to Sh26.6 billion.

•It's main competitor Equity Group's Q3 results released on November 12 showed non-funded income grew by 14 per cent to Sh22.54 billion up from Sh19.83 billion to lift total income by 11 per cent to Sh54.83 billion up from Sh49.3 billion.

Joshua Oigara CEO KCB during an investor briefing.
Joshua Oigara CEO KCB during an investor briefing.
Image: FILE

KCB Group has realised a 6.67 per cent growth in after-tax profit for the third quarter ending September 2019 to post Sh19.2 billion, boosted by growth in the loan book and increase in non-funded income.

Results released yesterday shows total income was up 10 per cent from Sh54.2 billion to Sh59.7 billion, with non-funded income increasing 16.9 per cent courtesy of digital investment, largely KCB M-PESA.

Fees and commissions increased by 28 per cent to Sh14.1 billion on diversified income streams with enhanced investments in digital channels.

 
 
 

Transactions through the mobile banking platform more than tripled over the review period to Sh98 billion compared to Sh23 billion last year.

KCB Group CEO Joshua Oigara said the bank had taken measures to reduce cost leading to one per cent reduction in operating expenses to Sh26.6 billion.

Cost to income ratio dropped to 44.7 per cent compared to 49.7 per cent in the same period last.

“The international businesses have continued to improve while our digital offerings are witnessing increased activity, giving the business impetus to continue growing,” said Oigara.

Net interest income expanded seven per cent to Sh38.7 billion from Sh36.3 billion primarily due to a growth in the loan book.

The loan book closed at Sh 486.4 billion from Sh435.3 billion, an improvement of 12 per cent, reflecting strong lending mostly driven by retail and corporate banking customer segments.

 

Loans disbursed under KCB M-Pesa platform grew from Sh23 billion last year to Sh98 billion.

 

 It's main competitor Equity Group' Q3 results released on November 12 showed non-funded income grew by 14 per cent to Sh22.54 billion up from Sh19.83 billion to lift total income by 11 per cent to Sh54.83 billion up from Sh49.3 billion.

Net interest income over the period was 32.29 billion shillings, up from 29.5 billion a year ago.

The faster growth in total income above net interest income reflects the success of the strategic pursuit of the Group to grow quality income through non-funded income growth.

“The Group’s cost to income ratio improved to 51.3 per cent from 51.5 per cent driven by a faster improvement in the cost to income ratio underpinned by efficiency and cost optimization driven by innovation and digitization,” the Groups CEO James Mwangi said.

About 97 per cent of all Equity's transactions are done outside the branch while 93 per cent of all the group loan transactions are via the mobile channels.

The bank posted a 10 per cent increase in net profit to S17.46 billion, over the same period.

Kenya’s largest lender by asset base, KCB Group’s balance sheet expanded by 12 per cent to Sh764.3 billion from Sh684.2 billion, with deposits up  11 per cent to Sh586.7 billion supported by continued growth in personal and transaction accounts.

The acquisition of National Bank of Kenya is expected to further cement KCB’s position in the domestic banking sector and strengthens its ability to access more business flows.

Early this month, NBK announced profits before tax of Sh675 million for the period ended September 30, representing a 45 per cent growth from a similar period in 2018.