Kenya Commercial Bank net profit increased from KSh 24 billion in 2018 to KSh 25.2 billion at the end of the financial year ended 31st December, 2019.
This impressive financial performance is against a constrained business environment that was characterized by a slowed credit to the private sector due to interest rates cap law. These controls on cost of bank credit have since been removed.
KCB’s balance sheet size grew from KSh 714.3 billion to KSh 898.6 billion during the period under consideration while deposits from customers increased from KSh 537.5 million to KSh 686.6 billion.
Net loans and advances to customers increased from KSh 455.9 billion to KSh 535.4 billion with net interest income rising from KSh 48.8 billion to KSh 56.1 billion.
KCB’s pre-tax profit increased to KSh 36.9 billion from KSh 33.6 billion at the close of financial year ended 31st December, 2018.
Directors of KCB Group have recommended a final dividend of KSh 2.50 after paying an interim dividend of KSh 1.00. Shareholders will be paid the full dividend at the close of business on 27 April, 2020 of KSh 3.50.
Available figures place KCB has the largest bank in Kenya, with a market share of 14.1 per cent. It is also the largest mortgage lender with a market share of more than 29.4 per cent.
In the third quarter of 2019, KCB had a total of 17.3 million customers and 260 branches across Kenya, Uganda, Tanzania, Rwanda, South Sudan and Burundi.
A Kenya Banking Sector Report 2020 by Faida Investment Bank (FIB) titled Against All Odds mentions that despite its huge regional presence, Kenya still accounts for the largest contribution to the Group’s profitability, at more than 80 per cent in 2018.
Over the 10-year period between 2008 and 2018, the contribution of regional subsidiaries has remained low and even hit negatives in 2009.
Analysts at FIB attribute this underperformance to a slowed business in South Sudan due to the ongoing conflict there. Huge provisions have also been made in recent years to keep the Uganda subsidiary afloat.
KCB plans to make more acquisitions in Rwanda will using alternative delivery channels in all its regional subsidiaries. The Group plans to reduce over-reliance on brick and mortar branch model so as to cut on high cost of running these regional outfits.
With one of the most robust digital lending platforms, pressure by the Competition Authority of Kenya (CAK) to regulate this space, is seen as one of the risks facing KCB.
While KCB was initially charging a 4 per cent interest on short term digital loans, it has since increased this to 7 per cent, for a one-month loan.