Ratio Magazine :: The Inside Track to East Africa’s Economies - EAC: Press Releases: KCB Profits Grow by 64% in First Nine Months

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EAC: Press Releases: KCB Profits Grow by 64% in First Nine Months

Friday, 24 October 2008

October 23, 2008 --- KCB maintained its growth momentum for 2008 reporting a 64% increase in pretax profits for the first nine months of the year. Group Chief Executive, Martin Oduor-Otieno, released the bank’s un-audited trading results for Q3 that showed profit before tax of KES5.2bn up from KES3.2bn for the same period last year. “We are pleased to announce a steady improvement in our trading results that generally reflects the momentum we have witnessed in the business over the past couple of years,” said the Chief Executive.

Funded income increased by 29% from KES6.2bn in September 2007 to KES8.04bn this year. Non-funded income contributed KES3.9bn, an 18% growth over 2007, while foreign exchange income doubled to KES1.1bn up from KES555m for the same period in 2007. “Our foreign exchange income line performed really well due to increased activities in the financial markets,” said the Chief Executive.

Total operating income thus stood at KES13.8bn from KES10.5bn for the respective period last year, (representing an increase of 33%) against total operating expenses of KES8.9bn (35% higher) up from KES6.6bn spent during the same period in 2007. “We are on target to deliver good results for the full year based on our performance to date”, said the Chief Executive.

The bank’s balance sheet now stands at KES183bn making it one of the largest in the Region. This represents a 67% increase over the KESs110bn balance size in September 2007. Net loans and advances grew by 53% to stand at KES88.1bn up from KES57.7bn in 2007 due to growth in business arising from a growing economy, increased marketing and improved relationship management in both the retail and corporate segments.

Deposits increased by 26% from KES87.7bn in September 2007 to KES110.6bn this year. Of this, there was a marked increase in current account balances from KES45.1bn in September last year to KES62.9bn this year and fixed deposits, up from KES13.1bn last September to KES18.9bn this year. The bank’s performing loan book remained strong at KES86.3bn while the net non-performing portfolio remained below KES2bn.

The bank enjoys healthy prudential ratios following a successful second rights issue concluded in August with core capital to total deposit liabilities at 14.6% (CBK minimum – 8%), core capital to risk weighted assets at 15.5% (CBK minimum – 8%) and liquidity at 32.3% (CBK minimum – 20%). We continue to invest significantly in our regional branch network. The Bank is now operating in four countries namely Kenya, Tanzania, Sudan and Uganda.

“I am pleased to announce that our new business in Rwanda will open its doors at the end of the next week. This will move us closer to completing our representation across the East African region. KCB has been in Southern Sudan since mid 2006 with a branch network of two branches; in Rumbek and Juba. We are currently expanding the branch network by an additional nine branches in other cities in the country. The business in Sudan is profitable and now contributes significantly to the group’s balance sheet. We have restructured the business in Tanzania to make KCB more competitive. We are expanding the branch network by seven branches in addition to the existing five branches to increase our footprint in the country. We opened our doors in Uganda in November 2007 and now have three branches. Plans are underway to open additional 8 branches in this market. Our business in Uganda is picking up well and expect to return a profit within the projected period”, said the Chief Executive. “The performance of all the subsidiaries is within expectation and going forward, subsidiaries should contribute significantly to the Group performance.”

Going forward, the Chief Executive said the bank was building its capacity for further growth into 2009 with an aggressive enhancement of its products offering.

The bank this week migrated to a new core banking system, Temenos T24 renewing optimism it will improve our quality of service. The system will enable the Bank significantly expand customer base and product offering.

“During the course of the year we unveiled several new products including the recently launched KCB Insurance Premium Finance and the KCB Masomo Loans which are critical to our continued growth,” he said.

On the global financial crisis, Oduor-Otieno commented:

“KCB is well positioned to withstand the effect of the global financial crisis because of its strong balance sheet, quality of assets well diversified deposit base and strong liquidity. The fact that governments overseas are supporting the institutions at risk should help cushion the adverse impacts on our operations.”

Although negative sentiment has led to a fall in price on the Nairobi Stock Exchange in the recent past, Oduor-Otieno was confident that the KCB share price would recover soon as the fundamentals in the business remained strong.

Oduor-Otieno commended KCB Staff and customers for their contribution in returning such an impressive performance.

“This is excellent performance for us and I would like to thank all our stakeholders for making it happen,” he concluded.

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