KCB resumes dividends after 86% profit surge to Sh29.9Bn
The Board of KCB Group has recommended Kes1.50 interim dividends, reflecting a strong performance that saw the bank post Kes29.9 billion net earnings in six months to June 2024. This profit was an 86 percent increase compared to the lender’s performance during a similar half in 2023.
According to Group Chief Finance Officer Lawrence Kimathi, the Kes4.8 billion interim dividend payout, which is on account of strong profitability and solid capital buffers by the regional banking giant, will be made on or about 30 October 2024 to shareholders on the Register of Members at the close of business on 12 September 2024.
“We delivered a commendable first half of the year, despite strong headwinds in the operating environment, especially in Kenya,” Group CEO Paul Russo said during an investor briefing on Wednesday.
The lender saw net loans and advances increase by 7 percent to Kes1.03 trillion even as revenues soared across both funded and non-funded income lines.
Additionally, net Interest income increased by 35 percent supported by improved yields and increased lending to key segments. KCB’s non-funded income grew by 21 percent, driven by digital banking, and FX trading income, as well as the enhanced contribution from DRC-based subsidiary Trust Merchant Bank (TMB).
Provisions increased by 20 percent to Kes12.2 billion, impacted by non-performing loan downgrades cushioned by the impact of the appreciation of the Kenya Shilling relative to the foreign-denominated facilities.
Read also: KCB’s green loan portfolio hits 21Bn in 2023
In the half, KCB’s return on equity improved to 25.5 percent, up from 15.9 percent, while shareholders’ funds grew by 14 percent during the period to close at Kes248.2 billion up from Kes217.9 billion.
Overall, the Group’s gross non-performing book stood at Kes212 billion which saw the NPL ratio close the quarter at 18.5 percent.
“This was as a result of downgrades in Kenya and the impact of translation of the foreign currency-denominated book. To mitigate the effect of increased NPLs, provisions increased by 20 percent and an enhanced regulatory coverage ratio of 104.3 percent,” the bank explained.
The bank said its stock of bad loans was concentrated in about 20 large borrowers within manufacturing, real estate, construction, and trade. While manufacturing was the highest accounting for 26.9 percent of the NPL stock, disclosures shows that borrowers in real estate accounted for the second highest share of non-performing loans at 15.8 percent.
Other big contributors of non-performing loans for the bank were personal/household borrowers at 14 percent, trade at 10 percent, and agriculture at 8.2 percent.
Further, KCB’s diversification into the regional market continued to pay off with contributions by subsidiaries (excluding KCB Bank Kenya) closing the half at 37.8 percent in pretax profits and 34.4 percent in total assets.
