Regional lender KCB Group has suffered a hit in its half-year financial results, with net earnings decreasing by 18.3 percent to Kes16.1 billion due to higher costs in the half.
KCB Group CEO Paul Russo said 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 deposit rates, prudent provisioning on legacy credit facilities, and provisions for legacy legal claims at NBK,” added Russo.
In the half, the bank’s assets demonstrated remarkable expansion, increasing by an impressive 54.1 percent to Ksh1.86 trillion Year-on-Year.
KCB interest-earning assets
Net interest income experienced 12.1 percent increase, reaching Kes45.5 billion while non-funded income increased by 43.4 percent to Kes27.6 billion. This rise indicates the bank’s effective management of its interest-earning assets in a dynamic interest-rate environment.
Total operating income showed a substantial YoY increase of 22.2 percent, totaling Kes73.1 billion. This rise is a reflection of the combined strength of both net interest income and non-funded income, underscoring the bank’s multifaceted revenue generation approach.
Despite the challenges faced, including the elevated operating environment, total operating expenses recorded a significant YoY increase of 60 percent, reaching Kes50.6 billion. The CEO said the Group inherited legal claims in National Bank of Kenya (NBK) and staff restructuring costs incurred in KCB Kenya and NBK being an investment to right-size the organizations.
Customer loans registered a notable increase of 32.1 percent, totaling Ksh964.8 billion YoY. This growth underscores the bank’s continued efforts to support economic activities by providing access to credit for various segments of its customer base.
“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.
SME loan guarantee scheme
Early this month, KCB Bank Kenya and Swedish International Development Cooperation Agency (SIDA) rolled out a Kes1 billion guarantee scheme to de-risk SMEs in their efforts to access credit and support their growth. The seven-year guarantee facility will enable the bank to strengthen its commitment to financing SMEs that continue to experience challenges, especially with access to affordable loans.
Customer Deposits surged by an impressive 61.9 percent to Ksh1.5 trillion YoY, signifying the strong trust that customers place in KCB Group as a safe and reliable custodian of their funds.
Shareholders’ funds, without non-controlling interest, expanded by 17.9 percent to Kes211.2 billion, reflecting the bank’s prudent financial management and commitment to delivering value to its investors.
The Cost to Income Ratio (without provisions), a key measure of operational efficiency, stood at 55.3 percent, reflecting the bank’s efforts in optimizing its cost structure while investing in growth initiatives.