28 February 2014

Kenya: KCB's Full Year Net Profit Rises to Sh14 Billion

KCB Group has reported a 17.5 per cent increase in net profit to Sh14.34 billion for the year ended December 31, compared to Sh12.2 billion in the previous year. The lender said its performance was buoyed by cheap customer deposits, new banking products and overall profitability of regional businesses.

Net interest income for the group was up 7.8 per cent to Sh33 billion from Sh30.6 billion in the previous year, while foreign exchange income was flat at Sh3.7 billion. Chief executive Joshua Oigara said the lender's operational expenses were pushed up eight per cent to Sh27 billion owing to a Sh1.1 billion one-off restructuring cost last year.

The board has proposed to pay a dividend of Sh2 per share, 10 cents higher than it paid for financial year 2012. This will raise its pay-out to Sh5.97 billion from Sh5.64 billion a year before.

Its non-performing loans were up to 8.1 per cent in the fourth quarter compared to a 6.7 per cent rise in a corresponding period in the previous year. Net NPLs exposure rose by 173 per cent to Sh3.66 billion from Sh1.3 billion in 2012.

"NPLs were higher due to a delay in payments from our customers contracted by government particularly in construction and the revised CBK guidelines require six months before customers in arrears can be reviewed," Oigara said.

The group also reduced its long term debt by 13 per cent to Sh7.72 billion from Sh8.92 billion and is betting more on short-term customer deposits. "Long term debt is not necessarily expensive and we intend to bring on board about $150 million (Sh12.9 billion) this financial year which will help in expanding our mortgage business," Oigara said.

Group chairman Ng'eny Biwott said the bank is eyeing the whole of eastern Africa region in the medium term.

"We are eyeing Ethiopia, Djibouti and Somalia subject to evaluation of risk. Our expansion will be carefully controlled," Biwott said.

Oigara said KCB will optimise alternative channels such as agency banking and mobile and internet banking to grow customer numbers and raise deposits. It will also target a bigger chunk of cash-less payment services.


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