Ratio Magazine :: The Inside Track to East Africa’s Economies - Kenya: Press Releases: KCB Reports KES3.4bn Profit for Q1 2012

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Kenya: Press Releases: KCB Reports KES3.4bn Profit for Q1 2012

Friday, 27 April 2012

Nairobi, 26 April 2012 --- KCB Group Chairman Peter W. Muthoka released the bank’s Q1 2012 results showing a 35% increase in profit before tax to KES3.4bn, up from KES2.5bn reported over the same period in 2011.

Muthoka said: “Despite the difficult operating environment and macro-economic challenges, KCB Group has continued to achieve excellent progress in all areas of its businesses and these results are in line with our expectations for the year 2012. We are confident that the continued implementation of our Transformation initiatives during the last 12 months will spur the group’s strong performance for the rest of the year.

Net interest income went up by 36% to KES6.9bn from KES5.1bn over the same period in 2011, with fees and commissions growing by 23% from KES1.9bn to KES2.4bn over the same period last year.

This was due to growth in assets and improved performance in our regional subsidiaries. Our customer numbers have also continued to increase and currently the group has a customer base of 1.8m.”

Commenting on the results, KCB Group Chief Executive, Dr. Martin Oduor-Otieno said: “The impressive first quarter results are attributed to the on-going product and services innovations that the bank continues to implement seamlessly across the group.”

The bank’s total operating income increased by 30% from KES7.9bn reported in March 2011 to KES10.3bn, while the total operating expenses grew by 28% from KES5.0bn to KES6.4bn. This is attributed to the impact of higher inflation and increased investments to consolidate network and infrastructural expansion across the region.

There was significant improvement on the bank’s balance sheet that grew by 23% from KES271bn at the end of the first quarter in 2011 to stand at KES334bn.

The net loans and advances went up by 26% from KES155bn in March 2011 to KES195bn in March 2012, attributed to growth in lending to mortgage, small and medium enterprises (SME) and corporate customers.

Customer deposits grew by 24% from KES209bn in the first quarter of 2011 to KES260bn in March, 2012 due to deposit mobilisation initiatives to support customers’ requirements.

“In the past one year, KCB has seen an upsurge in mortgage lending at 49% following the roll out of this product into Rwanda, Uganda and Tanzania. The corporate business also grew by 39% supporting the import business and trade financing. In addition, through the agent banking channel, we continue to witness growth in agency banking that now stands at 2,840 agents reaching out to the unbanked,” said the group CEO.

Net provision for bad debts rose by 21% from KES422m for the first quarter of 2011 to KES509m. There was strong improvement on bad debts recovery by 100% from KES3m in the first quarter of 2011 to KES250m in the first quarter of 2012.

“This was due to improved quality of the bank’s loan book and aggressive recovery of outstanding debts that are now being serviced,” said Oduor-Otieno. “We have put in place a robust business plan that will ensure that our Kenya and International Businesses continue to maintain the growth momentum witnessed last year to sustain the profitability pattern so far enjoyed.”

The subsidiary businesses contributed positively to the group’s bottom line by registering KES0.4bn in profits before tax compared to KES0.2bn reported in first quarter last year, a 100% growth. This reflects 11.8% contribution compared to the first quarter last year when the international business contribution towards the group’s bottom line was at 8%.

The transformation initiatives were also rolled out in all of KCB’s markets, namely Tanzania, South Sudan, Uganda and Rwanda, over the past 12 months yielding positive outcomes. To complete its presence in the East African region, KCB will be opening its operations in Burundi next month with two startup branches. “The strong investment in our regional business over the past five years has greatly contributed to the turnaround of their individual performances,” added Oduor-Otieno.

The bank remained strong on the prudential ratios with core capital to total deposit liabilities at 18.8% (CBK minimum: 8%), core capital to total risk weighted assets at 20.7% (CBK minimum: 8%) and liquidity at 33.5% (CBK minimum: 20%).

The group chairman said that KCB has continued to achieve excellent progress in repositioning itself to move from a good bank to a great bank. “We have witnessed accelerated growth in all business segments and have created a strong base so far to enable the bank to move ahead on product delivery and customer service”.

KCB Shares
KCB share price rallied at 32.047% in the month of January to March 2012, outperforming the NSE 20 Share Index and all its banking peers who improved by 5.023% over the same period.

Outlook
The group is optimistic that the current business environment and the regional economic outlook will continue to improve and support the group’s growth and profitability.

Banking Awards 2012:
In the just concluded Think Business Banking Awards, KCB won in nine categories as follows: