Ratio Magazine :: The Inside Track to East Africa’s Economies - Kenya: Press Releases: KCB Reports Modest 4% Growth in Half-

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Kenya: Press Releases: KCB Reports Modest 4% Growth in Half-

Thursday, 30 July 2009

Nairobi, 30 July 2009 --- KCB Group, one of East Africa’s largest commercial banks, today announced its half-year trading results, recording a modest 4% growth in pretax profit to KES3.64bn, although its operating profit increased by 29%. Chairman Peter Muthoka told investors the bank’s performance was on track but appeared modest owing to significant write-backs in the period to June 2008 that did not materialize this year. “This improvement may give the impression that our growth was modest, but if you look at the actual operating profit, our business grew by 29%. However, in comparison with the same period in 2008, we come short because we had significant recoveries last year that we have not been able to realize over the last six months,” said Muthoka.

The bank’s total operating income grew by 28% from KES8.95bn to KES11.4bn, while total operating expenses increased by 27% from KES5.7bn in June 2008 to KES7.2bn due to enhanced investment in information technology, new branch and product rollout as well as employee recruitment. The increase in operating income was propped up by an impressive 77% growth in foreign exchange income to KES1.2bn, up from KES697m in 2008. The bank’s provisions for bad and doubtful debts went down by 23% due to improved risk management measures.

Assets increased by 4% to top KES177.8bn, compared to KES171.4bn over the same period in 2008, reaffirming KCB’s position as one of the largest banks in the region in that respect. “We still have a very strong balance sheet in spite of a drop from our 2008 end-year position due to movements in balances with other financial institutions,” said Oduor-Otieno.

Net loans and advances went up by 47% from KES70bn in June 2008 to KES103.7bn during the first half of the year; while deposits recorded a 23% increase to KES127.6bn, up from KES103.4bn during the same period in 2008. “We continue to book new assets in our loan-book and are mobilizing more deposits to enhance our capacity to finance customer needs,” added the Chief Executive.

The bank remained strong on prudential ratios with core capital to total deposit liabilities at 12.8% (CBK minimum – 8%), core capital to total risk weighted assets at 13.3% (CBK minimum – 8%) and liquidity at 33% (CBK minimum – 20%). “Our strong capital position gives us the capacity to continue to market for new business and puts us among the top banks in the market that can finance large deals,” said the Chief Executive. Muthoka said the bank’s future had been boosted by a successful implementation of a new core banking system that will anchor the launch of new technology-based products and services. “The new system will also enhance our efficiency due to increased automation of our operations,” he added.

The Chairman said KCB’s good track record of profitability continued to inspire confidence among stakeholders. “It is on the back of our strong performance record that KCB was this month voted the best bank in Kenya by Euromoney Magazine,” he added. Chief Executive Martin Oduor-Otieno said the bank’s risk management framework was of the highest quality hence the reduction in provisions for bad and doubtful debts. “We will continue to expand our business in the region so as to increase market-share and grow stakeholder value,” said Oduor-Otieno.

KCB has 182 outlets with Kenya running 156 branches, Tanzania 9, Uganda 11, Sudan 5 and Rwanda one. The bank has over 220 proprietary automated teller machines and has arranged access to an additional 110 units owned by PesaPoint for its customers.

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