• Customer loans also saw a 12.2 per cent rise to Sh1.13 trillion, driven by additional lending to support business activities.
• Total revenues increased by 31.6 per cent to Sh48.5 billion driven by both funded and non-funded lines.
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KCB Group has regained its position as East Africa's most profitable bank after posting a 69 per cent growth in net earnings for the first three months of the year.
The lender's Q1 results released Wednesday shows net profits almost doubled to Sh16.5 billion from Sh9.8 billion in a similar period in 2022.
KCB Group managing director and CEO Paul Russo termed the performance as historic, boosted by revenue growth across the bank’s entire network, pushing the balance sheet to Sh2 trillion, from Sh1.6 trillion a similar period last year.
Total revenues increased by 31.6 per cent to Sh48.5 billion driven by both funded and non-funded lines.
The non-funded income, at 36 per cent of the total revenues, was supported by increased transaction volumes from customer confidence, adoption of the digital banking and alternative channels in making banking accessible.
“Despite a difficult operating environment across the region, we saw a strong revenue performance in the business as we entrenched prudent credit, liquidity, cost, and overall risk management. Consumer deposits continued to grow, a show of confidence that our clients have in the brand.”
“Our deliberate investments in digital and payments capabilities as well as the regional expansion approach continued to deliver impressive results,” Russo said.
He added that the lender would continue to leverage its capabilities through syndication of facilities and tapping on centres of excellence to drive operational efficiency.
"Under our shared services model, we prioritised automation of key processes, rolled out more products on our self-serve channels and review of loan application processes continued to drive customer obsession and reduce friction."
The lender posted significant rise in key financial metrics for the first quarter, with customer deposits increasing by 25.4 per cent to Sh1.5 trillion, primarily from the Kenyan market.
Customer loans saw a 12.2 per cent rise to Sh1.13 trillion, driven by additional lending to support business activities.
The group's diversification strategy is yielding results, with businesses outside KCB Bank Kenya contributing 17.9 per cent of pre-tax profits and 13.1 per cent of total assets.
Operational efficiency improved as the cost-to-income ratio dropped to 43.3 per cent from 51.2 per cent, attributed to strong income growth and strict cost management.
Despite this, total costs rose by 11.3 per cent to Sh21. billion, mainly due to inflationary pressures affecting East Africa and globally.
Loan impairments surged by 53.4 per cent due to downgraded facilities, leading to a gross non-performing loan (NPL) book of Sh205.3 billion and an NPL ratio of 18.2per cent.
The increase was attributed to downgrades in Kenya and the impact of foreign currency translations. The group is prioritizing efforts to improve asset quality through various measures aimed at reducing NPL ratios in the short and long term.
Shareholders' funds grew by 11 per cent to Sh238.6 billion, up from Sh214.8 billion in the previous year.
This increase reflects the value gap between the group's book and market valuations, offering an attractive entry point for new shareholders and growth opportunities for existing ones. Return on equity improved from 19.7per cent to 28.6per cent.
The lender remains optimistic of the business prospects in the remaining part of the year, compared to last year.
“We have made tangible progress to sustain superior shareholder value by delivering strong financial performance while driving our agenda to build a future-proof business. Prudent deployment of our capital has ensured that we were able to remain resilient and deliver for our stakeholders,” said KCB Group Chairman Joseph Kinyua.
The Group maintained a strong capital profile with a core capital to risk-weighted assets ratio of 15.7 per cent, exceeding the statutory minimum of 10.5per cent.
The total capital to risk-weighted assets ratio was 17.8per cent, above the regulatory minimum of 14.5per cent.
All banking subsidiaries complied with local regulatory capital requirements, except for NBK.