KCB Group nine-month pre-tax profit up 17 per cent

Kenya Commercial Bank Group has announced a 17 per cent increase in pre-tax profit for the nine months ending September 2014 to Sh17.7 billion. This is compared to Sh15.2 million posted in a similar period last year.

This improvement in profitability is attributed to growth in non-funded income and enhanced business efficiencies through the use of alternative channels. KCB has also been on an aggressive campaign to recover previous non-performing loans as exhibited by the drop in non-performing loans (NPL) ratio.

KCB climbs to the top as the most profitable bank, surpassing close rival Equity Group which announced a 23 per cent increase in pretax profit to Sh15.8 billion. Attention now shifts to foreign-owned Barclays and Standard Chartered banks, both strong in the corporate lending segment.

In nine months this year, KCB has recorded a 17 per cent increase in total income to Sh42.8 billion from Sh36.6 billion. This was a result of a jump in fees and commissions which were up 20 per cent from Sh7.6 billion to Sh9.1 billion.

Income from foreign exchange trading rose by 20 per cent to reach Sh3.2 billion from Sh2.7 billion while operating expenses stood at Sh20.6 billion, a 6 per cent increase.

“Going forward, KCB hopes to leverage on advancements in technology to drive financial inclusion and improve the customer experience within the East African region,” said Joshua Oigara, KCB Group CEO while releasing the third quarter financial results at Kencom House.

Despite setbacks in South Sudan due to the ongoing political upheavals, the group maintains that the situation could have been much worse. As a sign of confidence, KCB last week opened two additional branches in South Sudan, at Munuki and Konyo Konyo, all located in Juba city. “Although we have had currency shortages in South Sudan, efforts to find a peaceful settlement to the political problems is encouraging. We did not halt operations even with the ongoing hostilities in South Sudan,” said Oigara.

Investment banking arm

KCB Group is East Africa’s largest commercial bank with subsidiaries in Tanzania, South Sudan, Uganda, Rwanda and Burundi. The Group has a branch network of 240 branches, 962 ATMs and 9,238 agents.

KCB plans to upgrade its core banking platform in a $6 million investment that will allow the bank to handle 50 million customers from the current 20 million on the T24 platform. “Once the upgrade is complete, customers will be able to transfer money directly from their bank accounts to their phones among other services,” said Oigara. KCB is also expected to begin trading at the Nairobi Securities Exchange through KCB Capital Limited - its recently licensed investment banking arm.

The Group extended loans totaling Sh264.3 billion during the period, up 17 per cent from last year’s Sh225.7 billion, enabling customers to invest in farming, business and education.