- Group businesses increased their profit contribution to 16.8 per cent driven by new business growth and the impact of BPR Bank.
- Mobile lending values were up 23 per cent to Sh91 billion while total values transacted on the mobile were up 22 per cent to 1.28 trillion.
An improvement in both the funded and non-funded income streams lifted KCB Group Plc's net earnings for the first six months of the year by 28.4 per cent to Sh19.6 billion.
Additionally, the international subsidiaries increased their overall contribution to the Group’s performance.
According to the lender's financial results released on Wednesday, the total operating income increased by 16.8 per cent mainly driven by a 29.9 per cent growth in non-funded income.
Group businesses increased their profit contribution to 16.8 per cent driven by new business growth and the impact of BPR Bank.
KCB Group CEO Paul Russo said they delivered solid results, supported by the diversified business model as the group sharpened its focus on customer obsession and execution.
''Despite some uncertainties and headwinds, we saw sustained signs of recovery across the region, allowing us to deliver stronger shareholder value,” Russo said.
Interest income grew by 15.7 per cent to Sh54.5 billion mainly driven by a 31.5 per cent growth in income from government securities.
This was partially offset by a 30.3 per cent increase in interest expense as the cost of funding marginally increased during the period.
Net interest income increased by 11.5 per cent to Sh40.6 billion.
The 29.9 per cent jump in non-funded income was driven by lending fees, and services fees – on account of increased activity especially in trade finance and foreign exchange income.
Key to this outcome was the contribution from our digital channels which maintained 98 per cent level of transactions by number performed outside the branches.
Mobile lending values were up 23 per cent to Sh91 billion while total values transacted on the mobile were up 22 per cent to 1.28 trillion.
The values transacted on internet banking and merchant/POS terminals were up 102 per cent and 50 per cent respectively.
This performance boosted the Group NFI ratio to 32.1 per cent compared to 28.9 per cent achieved in the previous year.
Provisions decreased 34.4 per cent largely due to a drop in corporate and digital lending impairment charge.
Appropriate IFRS 9 staging in prior years had already recognised associated impairment.
Operating costs went up by 20.3 per cent on the consolidation of BPR Bank in Rwanda, increased spending on customer acquisition initiatives, investment in technology and higher staff costs.
This increase drove up the Group cost to income ratio to 45.7 per cent.
The Group is confident that once these transition-related activities are concluded, the cost-to-income ratio will reduce to below 44 per cent.
Looking at the balance sheet, total assets stood at Sh1.21 trillion for the period, up 18.4 per cent on additional lending, deposits growth and the consolidation of BPR subsidiary.
Customer loans increased by 20.2 per cent to Sh730 billion from new disbursements across the Group while customer deposits grew to Sh909 billion, up by 15.6 per cent from the previous year.
Shareholders’ funds grew by 17.1 per cent to Sh179.1 billion on improved profitability for the period.
The Group capital buffers remained well above the regulatory requirement with core capital as a proportion of total risk-weighted assets standing at 17.7 per cent against the statutory minimum of 10.5 per cent.
The total capital to risk-weighted assets ratio was at 21.6 per cent against a regulatory minimum of 14.5 per cent.
During the period under review, KCB deepened its focus on scaling regional play by signing a definitive agreement with shareholders of TMB to acquire a majority stake in the Democratic Republic of Congo (DRC)-based lender.
The transaction is expected to close in the fourth quarter of 2022, subject to regulatory, shareholders and other approvals.
This will see KCB acquire 85 per cent of the shares in TMB with an option to acquire the balance in due course.
KCB Group continues to champion sustainable business practices to drive positive environmental, social and governance impact in the regions we operate.
During the quarter, the bank completed and submitted to the regulator the Climate risk roadmap following the issuance of the CBK guidelines on climate risk disclosures.
Additionally, KCB grew the proportion of its green portfolio to 11.68 per cent of the total loan book.
The lender remains confident of a stronger second half and an economic turnaround across the region.
''We remain focused on delivering on business growth while at the same time continuously building a socially responsible and sustainable business,” said KCB Group chairman Andrew Wambari Kairu said.