KCB Group’s Congo entry pays off as assets cross Sh2 trillion
Regional lender KCB Group has achieved a significant milestone by becoming the first financial institution in the region to exceed the two trillion shillings mark in asset size. The institution reported assets worth Kes 2.1 trillion as of the end of September, propelled by its entry into the Democratic Republic of Congo (DRC), which has contributed to increased earnings.
In the quarter under review, KCB’s balance sheet expanded by 64.5 percent, reaching Kes1.28 trillion, driven by the consolidation of its DRC-based subsidiary, Trust Merchant Bank (TMB), acquired in December 2022, as well as organic growth. The bank’s net earnings increased to Kes30.7 billion for the nine months ending on September 30th, up from Kes30.5 billion reported in a similar period in 2022.
KCB’s well-diversified balance sheet
KCB Group CEO Paul Russo commented, “With a solid and well-diversified balance sheet, we are on track to meet our full-year ambitions. This is evident in the improved performance in the third quarter, supported by resilient business segments and subsidiaries. We have made significant strides in modernizing both our hardware and application infrastructure to enhance capacity and systems capability.”
The contribution of KCB Group subsidiaries, excluding its Kenya banking unit, to overall profitability for the period surged by 27.9 percent, up from 16.4 percent as of September 2022, as investments in regional businesses continue to yield positive results. KCB’s Uganda unit saw revenues jump by 63 percent to Kes3.3 billion while Tanzania subsidiary earnings increased by 56 percent to Kes4.5 billion. At the same time, the lender’s South Sudan business registered 41 percent rise in revenue in the quarter that its Burundi unit registered 16 percent uptick in revenue to Kes1.2 billion.. Similarly, KCB’s Rwanda subsidiary posted 12 percent increase in revenue to Kes6.8 billion.
The Group’s non-funded income increased by 38.7 percent to Kes42.4 billion from Kes30.6 billion, driven by enhanced investments in digital capabilities, while funded income rose by 21.6 percent to Kes74.9 billion from Kes61.6 billion, attributed to earnings from loans and government securities.
Simultaneously, KCB’s net loans and advances crossed the one trillion-shilling mark for the first time, with the loan book reaching Kes1.05 trillion, up from Kes758.8 billion, largely due to the consolidation of the DRC subsidiary, TMB.
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Shilling depreciation
The depreciation of the Kenyan shilling against major currencies prompted KCB to increase its cover for non-performing loans by 118.1 percent, reaching Kes15.8 billion from Kes7.27 billion in September 2022.
Over the nine-month period, the Group’s total costs amounted to Kes60.8 billion, primarily driven by legacy legal claims at NBK, which incurred a loss of Kes3.8 billion, staff restructuring costs, and the impact of TMB consolidation.
Additionally, customer deposits rose by 79.6 percent to Kes1.7 trillion from Kes922.3 billion, while shareholders’ funds increased by 19 percent to Kes226.1 billion, reflecting the improved profits for the period.
KCB Group Chairman Dr. Joseph Kinyua expressed optimism about the future, stating, “For an outlook, we see the business sustaining the momentum. Inflation across the region is easing as domestic food price inflation falls on the back of improved agricultural production. We are optimistic that the various governments in the region will keep up with robust fiscal and monetary interventions to support sustained economic growth.”
