•Group CEO Paul Russo attributes the strong performance to sound business strategy that is anchored on customer obsession and a productive organisation culture.
•The profit before tax contribution of other subsidiaries excluding KCB Bank Kenya, increased to 17 per cent.
KCB Group PLC has posted Sh40.8 billion in profit after tax for the full year ending December 2022 on higher funded and non-funded income streams.
This was a 19.5 per cent rise in profitability from Sh34.2 billion reported in 2021, KCB said on Wednesday.
KCB Group CEO Paul Russo attributes the strong performance to a sound business strategy that is anchored on customer obsession, sharper execution, and productive organizational culture.
"The business benefited from a vibrant core banking business, growth of new business lines and accelerated digital transformation to post this record performance,” Russo said.
The profit before tax contribution of other subsidiaries excluding KCB Bank Kenya, increased to 17 per cent (up from 13.9 per cent in 2021), riding on organic growth in the subsidiaries and increased scale through BPR Bank Rwanda and Trust Merchant Bank (TMB), the newest DRC-based subsidiary of KCB Group.
Revenues increased by 19.6 per cent to Sh129.9 billion, driven by net interest income which grew by 11.5 per cent supported by earning assets and partially offset by an increase in interest expenses from higher costs of borrowing and interbank market rates.
Non-funded income grew 39.8 per cent largely from trade finance income, lending fees and commissions.
Costs were up 24.1 per cent compared to last year on account of increased business activities and the impact of BPR and TMB acquisitions.
Provisions increased marginally by 1.7 per cent compared to the previous year; a reflection of appropriateness in IFRS9 staging done in prior years.
On asset quality, the ratio of non-performing loans (NPL) stood at 17.3 per cent, largely driven by downgrades from the KCB Kenya business. Gross NPLs stood at Sh161.2 billion.
Whereas both the NPL ratio and stock show an increase compared to the prior year, there is a remarkable reduction from the peak numbers in June 2022.
On the balance sheet side, total assets stood at Sh1.55 trillion, growing 36.4 per cent on higher loans and investment in government securities and funded by growth in customer deposits and additional borrowings.
Customer loans increased by 27.8 per cent to Sh863 billion from additional lending in the Kenya business, increased lending in the international businesses and the acquisition of TMB.
Comparatively, customer deposits hit the trillion shillings mark, increasing by 35.6 per cent to Sh1.135 trillion, mainly from TMB and organic growth in the existing businesses.
Shareholders’ funds grew by 18.9 per cent from Sh173.5 billion to Sh206.3billion on improved and accumulated profits for the year to date.
KCB Group's capital base remained well within both internal and regulatory limits.
Core capital as a proportion of total risk-weighted assets stands at 14.2 per cent against the statutory minimum of 10.5 per cent.
The total capital-to-risk-weighted assets ratio was at 17.4 per cent against a regulatory minimum of 14.5 per cent.
The board has proposed a final dividend payout of Sh1.00 per share, subject to shareholder approval.
This is in addition to an interim payout of Sh1.00 per share which was paid out in January 2023.
This brings the total dividend payout for the year to Sh6.4 billion.
“We have made significant investments in our regional expansion strategy among them, our latest entry into DRC through TMB bank.
"These investments are key to accelerating our future growth and commitment to delivering shareholder value,” said KCB Group chairman Andrew Kairu.