KCB halts dividends as net profit dips to Sh37.5Bn on rising costs
KCB Group’s net profit has dipped to Kes37.5 billion for the year ending December 2023, marking an 8 percent decline from the previous year’s Kes40.8 billion.
The regional banking powerhouse attributed the reduction in earnings to a sharp rise in operational costs, including the consolidation of its Democratic Republic of Congo (DRC) subsidiary, Trust Merchant Bank (TMB), expenditures related to a voluntary retirement scheme in the period, and litigation fees.
The Group’s operational costs surged to Kes83.2 billion in 2023, up from Kes59.4 billion in 2022, significantly impacted by the consolidation of TMB and other strategic expenditures.
Additionally, the provisions for bad loans soared by 154.7 percent, driven by downgraded facilities in Kenya and the need for additional provisions against foreign currency-denominated loans, amid a depreciating Kenya Shilling.
Unlike other banks that have come out giving dividends to shareholders, the lender has opted to reserve its capital this year, hoping to post strong performance in 2024.
Despite these challenges, KCB Group’s CEO, Paul Russo, highlighted the bank’s resilience and positive performance across its core business lines.
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“We had a fairly good run in the 12 months in the wake of difficult economic times, with most of the business lines achieving strong organic growth,” Russo stated.
He added that the Group is committed to supporting customers through its loan book, aiding them in navigating economic hardships and achieving their ambitions.
Last year, the Group registered growth in customer deposits, with total assets reaching Kes2.17 trillion, a 40 percent increase from the previous year.
This growth was fueled by a notable rise in customer deposits, which jumped by 48.9 percent to Kes1.70 trillion, primarily from KCB Bank Kenya and the full-year consolidation of TMB.
The Group also reported a 28.7 perccent increase in customer loans, totaling Kes1.2 trillion.
Dr. Joseph Kinyua, KCB Group Chairman, said they’re strategically positioning its entities outside Kenya to support the Group’s Pan-African expansion ambitions.
“TMB in DRC has come in strong to drive this ambition,” Dr. Kinyua noted, underscoring the Group’s readiness to support Pan-African trade.
In its push to navigate future challenges and opportunities, KCB Group launched a new three-year strategy for 2024-2026, titled “Transforming Today Together.”
The strategy focuses on creating shared value through innovative and socially responsible initiatives, aiming to unlock value from what matters most.
Founded in 1896, KCB Group has expanded its footprint across Tanzania, South Sudan, Uganda, Rwanda, Burundi, and the DRC, with banking subsidiaries KCB Bank Kenya and National Bank of Kenya at the forefront.
