KCB Group Plc recorded a 74% rise in Net Earnings to KSh34.2Billion in 2021 in, what the lender attributes to growth in total income and reduction in loan loss provision charge as it steadily moved to the post-COVID-19 recovery phase.
Net profit grew to KSh34.2 billion compared to KSh 19.6 billion a year earlier, on the back of increased income, cost management and lower credit provisions which saw the Group post higher returns to shareholders.
“We made significant progress in achieving our 2021 strategic targets, which delivered a strong financial performance that was in line with gradual economic recovery across all markets. The third and fourth quarters were the turning point with a pick-up in lending activity even as the COVID-19 pandemic continued to impact on economic activity,” said Joshua Oigara, KCB Group CEO and Managing Director.
He told an investor briefing that the lender deliberately focused on supporting customers to weather the healthcare storm.
“We expect good business momentum this year with a projected economic recovery across markets,” said Oigara,
Revenues increased by 13.5% to KSh 108.6 billion on account of a rise in net interest income, up 15.0% to KSh 77.7 billion.
Non funded income grew by 9.9% to KSh 30.9 billion on increased customer transactions, FX income and income from accelerated loan growth.
Costs went up by 11.9% to KSh 47.8 billion from KSh 42.8 billion on account of an increase in staff and organisational expenses, consolidation of Banque Populaire du Rwanda (BPR) and inflationary adjustments across the group.
Other operating expenses increased marginally by 2.8% to close at KSh 22.9billion from KSh 22.3billion last year with improved cost management across the Group.
The lender’s balance sheet grew 15.4% to KSh 1.139 trillion, while Customer Loans – Increased by 13.5% to KSh675.5 billion through organic and strategic acquisitions.
Customer Deposits — increased 9.1% to KSh 837.1 billion due to organic growth, mainly in the Kenyan market.
The ratio of non-performing loans (NPL) increased from 14.7% to 16.5%, signalling the longer-term effects of COVID-19 impact.
Several key sectors, largely construction, hospitality, and manufacturing, continued under pressure with slow recovery.
Provisions for the period reduced by 52% to close at KSh 13.0 billion from KSh 27.2 billion a similar period last year.
The decrease is largely due to lower corporate and digital lending impairment charge after the deliberate action on covid related provisions absorbed in the previous year.
The net loan book clocked KSh 675.5 billion on increased lending to key segments such as Micro Small and Medium Enterprises, consumer and corporate.
Shareholders’ funds grew 20.6% from KSh 142.4billion to KSh 171.7 billion on improved profitability for the period.
The Group maintained healthy buffers on its capital ratios over the minimum regulatory requirement, giving it a substantial headroom for growth.
Core capital as a proportion of total risk-weighted assets closed the period at 18.0% against the Central Bank of Kenya statutory minimum of 10.5%. The total capital to risk-weighted assets ratio was at 21.7% against a regulatory minimum of 14.5%.
The Board of Directors has recommended a final KSh 2.00 per share dividend. This follows an interim dividend of KSh 1.00 paid out in January.
The final dividend will be payable to the company members on the share register at the close of the business on Monday, 25 April 2022.
If approved, the total dividend per share for the year ended 31 December 2021 will be KSh 3.00 for each ordinary share.
The Group completed the acquisition of BPR on July 31, 2021, and has kicked off integration activities that will see the amalgamation of BPR and KCB Bank Rwanda into a single banking business.
“The benefits of our regional expansion continue to contribute to the KCB’s performance positively.
In 2021, the profit before-tax contribution from Group businesses went up to 13.7%, putting us on track towards our 20% target this year. KCB will continue exploring and pursuing attractive regional expansion opportunities to enhance our regional participation, accelerate growth, and maintain sustainable long-term performance,” said KCB Group Chairman Andrew Wambari Kairu.
“Our future has additional opportunities to exploit, details of which will be communicated as they develop, ” he added.
The Group continued to pursue growth initiatives within its Beyond Banking Strategy (2020-2023) which is anchored on delivering the best customer experience and driving a digital future.
This year, KCB is optimistic of better prospects on the back of a projected economic recovery in East Africa.
“We are optimistic about the East African economy’s inherent medium and long-term potential despite the looming effects of the geopolitical crisis in Europe, lurking threats of COVID-19 and other local developments, including the upcoming General Elections in Kenya,” said Kairu.
“The priority is to identify suitable investment prospects and consumption drivers to accelerate the pace of recovery and growth. As the growth gains momentum, it will lead to many more opportunities for all sectors of the economy and, in turn, inclusive growth,” he added.
In line with the Bank’s Beyond Banking Strategy, the Bank is focusing on putting its customers first with leading value propositions.
To support this approach, in December, the Bank revamped its MSME proposition across the markets with a Thematic Campaign dubbed ‘Partner Kwa Ground’ to demonstrate the support KCB extends to MSMEs and position us as a Bank that supports the segment across all sectors.
Overall lending to MSME grew by 23% from KSh 60 billion to KSh 74 billion. Last year, KCB partnered with various Counties in Kenya to lend to MSMEs under a Credit Guarantee to cushion them from COVID 19.
KCB Group received a series of global accolades, cementing its market leadership position. In December, KCB Bank, Kenya’s largest bank by Tier 1 capital, was named the Bank of the Year by the Banker Magazine on the back of its efficiency and cost reduction drive and the continued success of its digital business.
KCB was also feted as the Best Sustainable Bank in Kenya by the International Business Magazine to drive and ensure the adoption of sustainable and green financing initiatives.
KCB has been at the forefront in championing the adoption of sustainable financial business models, specifically in areas such as responsible lending and green finance. This keen focus on adopting sustainable business models has recognised KCB Bank as the “Most Valuable Banking Brand Kenya 2022” by Brand Finance.
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