KCB Group PLC, one of Africa’s premier financial institutions, has reported an impressive KShs. 45.8 billion profit after tax for the first nine months of 2024, marking a robust 49% year-over-year growth compared to KShs. 30.7 billion in the same period of 2023. This exceptional performance, despite challenging macroeconomic conditions, is a testament to the Group’s strategic focus on diversification, innovation, and sustainability.
Speaking during the announcement, KCB Group CEO Paul Russo attributed the growth to the bank’s strong fundamentals and customer-centric approach, coupled with resilience across its subsidiaries and business segments.
“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,” said Mr. Russo. “We are optimistic about a strong end of the year, riding on improving market conditions, suctioning for customers, and tapping the great strength of our people.”
Sustained Revenue Growth Across Business Lines
KCB Group’s revenue for the period increased by 22% to KShs. 142.9 billion, driven by both funded and non-funded income streams across its subsidiaries. This growth underscores the success of the Group’s focus on diversification, with non-Kenyan subsidiaries contributing 36.6% to the profit after tax and 34% to total assets.
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- Net Interest Income Surge: The Group recorded a 24% increase in net interest income, propelled by improved yields and enhanced lending to strategic sectors.
- Non-Funded Income: The robust performance in foreign exchange income, transaction fees, and revenues from Trust Merchant Bank (TMB) in the Democratic Republic of Congo further solidified KCB’s non-funded income growth.
Robust Balance Sheet Growth
The Group’s total assets grew to a remarkable KShs. 2.0 trillion, supported by stable customer deposit growth of KShs. 1.5 trillion. The loan book expanded to KShs. 1.1 trillion, reflecting growth in retail sector lending despite currency fluctuations impacting foreign-denominated loans.
Key highlights include:
- Customer Deposits: With deposits growing steadily, KCB has reinforced its liquidity position to support lending and investments.
- Capital Adequacy: The Group maintained robust capital buffers, with core capital as a proportion of total risk-weighted assets at 16.5%, well above the regulatory minimum of 10.5%.
- Addressing Non-Performing Loans
The Group’s stock of non-performing loans (NPLs) stood at KShs. 215.3 billion, pushing the NPL ratio to 18.5%. While this reflects the challenging economic conditions in key sectors, KCB has implemented measures to mitigate the impact, including increasing provisions by 12.2% year-over-year.
“Our focus remains on improving asset quality,” said Mr. Russo. “We have put in place various measures to reduce the NPL ratio in both the short and long term.”
Strengthening Shareholder Value
KCB continues to deliver exceptional returns for its shareholders, with return on equity improving to 25.6% from 19.6% in 2023. Shareholders’ funds increased by 14%, reaching KShs. 249 billion.
Driving Regional Growth and Impact
The contribution of subsidiaries outside Kenya underscores KCB’s strategic focus on regional diversification. With operations spanning East and Central Africa, the Group leverages its local market expertise to provide tailored financial solutions, promoting regional trade and connectivity.
In the Democratic Republic of Congo, Trust Merchant Bank (TMB) has been a standout performer, contributing significantly to the Group’s growth. Similarly, partnerships with institutions like the European Investment Bank and Invest International highlight KCB’s commitment to supporting SMEs, women-led businesses, and youth entrepreneurship across the region.
ESG and Sustainability Leadership
KCB remains a leader in sustainability, with significant investments in environmental, social, and governance (ESG) initiatives. The Group recently secured a USD 540,000 (KShs. 69 million) Project Preparation Facility from the Green Climate Fund to support MSMEs in implementing climate-resilient technologies.
Additionally, the Group’s 2023 Sustainability and ESG Report outlines ambitious targets, including increased green financing and the expansion of the 2jiajiri program, which empowers youth and women entrepreneurs.
Recent Corporate Milestones
- EIB Partnership: In October, KCB and the European Investment Bank signed a €230 million (KShs. 32 billion) partnership to support SMEs, women, and youth-led businesses in Kenya.
- NBK Sale Approval: KCB received regulatory approval for the sale of National Bank of Kenya to Nigeria’s Access Bank, a move that aligns with the Group’s strategic priorities.
- Airtel Money Collaboration: A new interoperability partnership with Airtel Money now allows seamless payments via the Lipa Na KCB service, enhancing financial inclusion.
Awards and Recognition
KCB continues to cement its leadership in the financial sector, earning accolades for customer excellence, innovation, and its transformative role in the region’s economic growth. Recently, the Group was named one of Kenya’s top three most valuable brands by Brand Finance, a global consultancy.
