KCB champions sustainability with Sh34Bn climate loans
KCB Group Chief Executive Officer Paul Russo.
KCB Group has disbursed loans worth KES34 billion this year as the regional lender continues to roll out support to projects aimed at addressing the impact of climate change.
According to the lender's investor update on its performance for the nine months ended September 2024, the Group screened loans worth KES290 billion for green projects spread across Kenya, Rwanda, Uganda, and Tanzania markets.
The regional lender has been championing a strong commitment to the Environmental, Social, and Governance (ESG) agenda as financial institutions in Kenya and across East Africa roll out funding strategies to help economies run sustainably.
"Last week, KCB Bank Kenya secured a Project Preparation Facility (PPF) of US$540,000 (about KES69 million) from the Green Climate Fund (GCF) for its concept note on MSMEs' Climate Sound Technologies for Production Efficiency and Business Value in Kenya," KCB Group statement added.
MSME green financing
This fresh line of funding, which was secured during the COP29 climate talks in Baku, Azerbaijan, is poised to enable the bank to extend financing to the micro, and small enterprises to actualize their green projects.
With this funding, KCB said it is better equipped to empower MSMEs to accelerate the rollout of their innovations and other investments that are urgently needed to respond to climate change challenges in the East African region.
In September, the Group launched its 2023 Sustainability and ESG Report which details the progress made and targets ahead. The Group is committed to remaining a leading green financier and positioning its ‘2jiajiri’ social impact platform as a tool to empower the youth to sharpen their skills and, therefore, make a living.
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KCB's 49% rise in net profit
Meanwhile, in the nine-month trading period, KCB Group PLC reported a 49 percent increase in net earnings to KES45.8 billion attributable to a steady rise in revenues. The bank reported KES30.7 billion in net profit during the comparable period in 2023.
According to the lender's disclosures, revenues surged by 22 percent to KES142.9 billion as both funded and non-funded income segments posted strong growth in Kenya and within the subsidiaries.
KCB's regional expansion strategy continued to pay dividends with the contribution of the subsidiaries (excluding KCB Bank Kenya) improving to close at 36.6 percent in profit after tax and 34 percent in total assets.
However, KCB Group Chief Executive Officer Paul Russo cited a tough operating environment characterized by high inflation, increased lending rates and currency swings. For instance, while local currencies in Kenya and Uganda strengthened marginally, the lender saw local currencies in Burundi, DRC, Rwanda, Tanzania, and South Sudan decline significantly against the USD.
“The operating environment has been tough across all our markets, but we have continued to walk the journey with our customers while ensuring our key fundamentals remain strong,” KCB Group CEO Paul Russo.
He added: “We are optimistic of a strong end of the year, riding on improving market conditions, solutions for customers and tapping the great strength of our people.”
In the period, the lender's assets contracted by 5 percent in what the CEO attributed to a steady strengthening of the Kenya Shilling against regional currencies. "Balance sheet has recorded a marginal drop due to appreciation of reporting currency in our subsidiaries," added Russo.
Another decrease was also experienced in customer deposits, which dipped by 7 percent to KES1.54 trillion as well as the lender’s investment in government securities, which eased by two percent to close the period at KES365 billion.
Furthermore, gross loans grew by 2.2 percent to KES1.16 trillion compared to KES1.14 trillion recorded in Q3 last year. Disclosures show that subsidiaries outside KCB Kenya account for 31 percent of the institution's gross loans.
In new frontier DRC for instance, the Group reported that TMB's net loans to deposit ratio increased on account of more uptake of loans by mining, transport, personal, and agriculture industries.
