Kenya’s largest bank by assets, Kenya Commercial Bank (KCB), has posted a 10 per cent growth in pre-tax profit, which it attributed to growth in its loans book and improved earnings from non-funded income in its business across six African countries.
The lender yesterday reported a profit before tax of Sh19.4 billion in the nine months ending September 2015, up from Sh17 billion reported in a similar period last year.
The bank saw performance of its subsidiaries in Uganda, Rwanda, Tanzania, Burundi and South Sudan grow by 74 per cent, year on year, to rake in over Sh2.2 billion, up from Sh1.1 billion recorded in the same period last year.
“The new strategy adopted for the International Business is gaining momentum and underpins our regional expansion model,” explained KCB CEO Joshua Oigara.
“While we experienced a relatively challenging economic environment across the six markets we operate in, we have seen overall business show great resilience, a trajectory we expect to continue with in the remaining part of 2015,” he said.
Earlier this year, the Central Bank of Kenya (CBK) raised the base lending rate by 3.5 per cent in less than three months, which has since led to a spike in consumer lending rates which the lender has since stated could depress uptake of loans if the situation persists.
In addition to this, the CBK’s decision two weeks ago to place a mid-tier lender under administration dampened investor appetite for financial stocks at the Nairobi bourse with all the listed commercial banks in Kenya feeling the pinch.
KCB’s share price at the Nairobi Securities Exchange (NSE) has since lost 36 per cent of its share value from a five-year high of Sh65 registered in April this year to Sh40.50 as at close of trading yesterday. Oigara reckons that the current share price is undervalued.
The bank’s total assets grew by 34 per cent, hitting Sh607.3 billion, up from the Sh451.6 billion recorded in September last year, with the growth attributed to growth in loans and advances, which constitute 57 per cent of the bank’s assets.
Customer deposits across the region grew by 35 per cent, from the Sh350 billion recorded in September 2014 to Sh471 billion in in the period under review.
The bank’s partnership with Safaricom has enabled the lender to grow its loan book and reach more consumers, disbursing a total of Sh4.3 billion as at September this year with almost half of this approved over the past six months.
KCB is the second top-tier bank to release its quarter three results after Equity Bank’s announcement on Monday. Equity announced that its net earnings to September 30, was Sh13.7 billion compared Sh12.48 billion posted during a similar period last year.
