KCB GROUP TOTAL ASSETS RISE BY 54%TO KSH. 1.86 TRILLION IN H1 2023, NET PROFIT CLOSES AT KSH. 16.1B

KCB Group Total Assets Rise by 54% to KShs. 1.86 Trillion in H1 2023,
Net Profit Closes at KShs. 16.1 Billion.

By Donald Kogai

KCB Group PLC recorded a 54% growth in

total assets to KShs.1.86 trillion in

the first half of the year ending June

30, 2023, as net profit closed at

KShs.16.1 billion.

The balance sheet growth was driven by

consolidation of Trust Merchant Bank

(TMB)acquired in December 2022, and

increase in customer deposits to

KShs.1.47 trillion, underpinning the

customer confidence in our brand.

Consequently, the loan book increased

by 32% to KShs.964.8 billion from

KShs.730.3 billion in half year 2022 as

we continue to support our customers

to grow their businesses.

Revenue grew by 22.2% to

KShs.73.1billion, driven by

consolidation and growth of TMB,

growth in customer loans, and non-

funded income (NFI). The NFI stream was

propelled by fees and commission as

well as sustained growth of digital

channel transactions and volumes.

Profit after tax was greatly impacted

by aggressive provisioning on

facilities in KCB Kenya, inherited

legal claims in National Bank of Kenya

(NBK) and staff restructuring costs

incurred in KCBK and NBK being an

investment to right size the

organizations.

The Group also prudently raised its

loan loss provisions on foreign

currency denominated credit facilities

on account of a challenging operating

environment,Commentary: Group CEO Paul

Russo “Despite a challenging economic

environment across our operating

markets, the business remained

resilient delivering a strong balance

sheet and increased contribution from

regional businesses. Profitability was

under pressure in the first half from

increased funding costs on higher

market deposits rates, prudent

provisioning on legacy credit

facilities, and provisions for legacy

legal claims at NBK,” said KCB Group

CEO Paul Russo.

“Looking ahead, noting the actions we

have taken and with significantly

improved liquidity, business focus is

on accelerated performance in the

second half of the year while

supporting the distressed customers” he

added. Performance Highlights

• Performance of regional businesses-

Contribution from businesses outside

Kenya

increased by 166% to 38.1% of the Group

business with profit before tax at

KShs.8.5 billion.

• On the revenues front, funded income

increased 12.1% to KShs. 45.5 billion

on loans and Government securities

growth to offset the growth in interest

expense from increased cost of

funding. Non-funded income increased by

43.4% to KShs.27.6 billion.

• Operating costs rose 48% to KShs.40.4

billion mainly contributed by legacy

legal claims, staff restructuring

expenses and TMB consolidation.

• Customer deposits increased by 61.9%

from TMB consolidation and organic

growth.

• There was a corresponding growth in

Customer Loans to KShs.964.8 billion, a

32% jump on loan disbursements to our

customers across all the markets.

• On asset quality, NPL ratio eased to

close the period at 17.4%, an

improvement of

410bps from the previous year. The

Group is committed to improving asset

quality.

• Shareholders’ funds increased by 20%

to KShs.218 billion from the increase

in profits for the period.

• KCB Group maintained healthy Capital

ratios complying with regulatory

limits. Core

capital as a proportion of total risk

weighted assets standing at 15% against

the statutory

minimum of 10.5%. Total capital to

risk-weighted assets ratio was at 18.4%

against a

regulatory minimum of 14.5%. All

banking subsidiaries operating outside

Kenya were

compliant with their respective

regulatory capital requirements.

Latest Corporate Developments

• Early August, KCB Bank Kenya and

Swedish International Development

Cooperation

Agency (SIDA) rolled out a KShs. 1

Billion guarantee scheme that will go

towards derisking SMEs in their efforts

to access credit and support their

growth ambitions. The

7-year guarantee facility will enable

the bank to strengthen its commitment

to financing

Small and Medium-Sized Enterprises

(SMEs) which continue to experience

challenges,

especially with access to affordable

credit.

• In June, KCB Group signed an Africa-

wide deal to facilitate settlements of

cross-border

transactions on the continent. The

agreement with the Pan-African Payment

and

Settlement System (PAPSS) makes KCB the

first Bank in East Africa to onboard

the financial market infrastructure

that provides a secure and efficient

channel for processing cross-border

payments. The platform is expected to

guarantee speed, affordability, and

reliability of transactions,

effectively boosting intra-African

trade and payments.

• KCB has deepened its play in the

payments space, leveraging digital

capabilities with a

partnership between the Bank, VISA and

Thales, to roll out a new service that

allows

customers to make in-store payments

through the KCB App by tapping their

Near-field

communication (NFC) enabled smartphones

at any contactless-enabled payment

Term nal.

• The Group continued to enhance its

customer value propositions. In June

KCB and NBK signed an agreement with

Britam General Insurance to distribute

affordable health insurance products

targeted at Small and Medium

Enterprises (SMEs) across the country.

In the deal, KCB Bancassurance

Intermediary Limited and NBK

Bancassurance Intermediary Limited will

jointly distribute the newly launched

KCB

Simba Health and Uzima Tele Insurance

Plans.

Outlook

“The Group is well positioned for

future growth, riding on its solid

governance structures

and digital capabilities, strong

regional presence and committed staff

to support customers and other

stakeholders. We are deliberate in

making a meaningful transformation for

communities and making a greater

contribution towards economic progress

across markets.” KCB Group Chairman Dr.

Joseph Kinyua.