KCB reaps big from relying on agents and mobile while cutting staff numbers

Kenya Commercial Bank has posted a 19.6 per cent increase in net profits following reduced staff costs and effective management of defaulters.

Group profit for the nine months to September was Sh18 billion, up from Sh15 billion in a similar period last year.

The problem of bad loans that seems to haunt the industry seemed not to touch the lender, with gross non-performing loans (NPLs) stagnant at Sh34.7 billion.

This allowed the bank to reduce NPL provision from Sh3.1 billion to Sh1.7 billion.

“The asset quality improved for the second straight quarter with NPL ratio closing at 7.5,” said KCB Group Chief Executive Joshua Oigara.

The bank’s reliance on digital and agency banking has seen it cut staff costs, which went down from Sh13.8 billion to Sh12.7 billion.

Non-branch transactions stood at 87 per cent of total volumes compared to 13 per cent handled at the branches.

Agency banking transactions grew by 74 per cent and mobile banking by 34 per cent, with ATM and point-of-sale transactions increasing by 36 per cent and 16 per cent respectively.

Mr Oigara said the lender’s focus on technology-driven growth has delivered both client satisfaction and efficiencies while keeping costs under control and diversifying the income streams.

KCB’s cost to income ratio improved from 51.9 per cent last year to 48.1 as it slashed total operating expenses by Sh2.1 billion.

Net loans and advances were up four per cent to Sh435.3 billion from Sh419.5 billion, pushing up income from lending by Sh2 billion.

The lender, which had served as Chase Bank’s receiver manager, saw other income increase from Sh2.6 billion to Sh3.2 billion.

KCB also made money from lending to the Government, which increased marginally from Sh9.2 billion to Sh9.7 billion.

The lender said it received additional resources through a Sh10.2 billion ($100 million) Line of Credit from the African Development Bank — to be used for on-lending to corporate businesses and small and medium enterprises.

The bank attracted depositors whose cash rose by Sh30 billion to Sh526 billion although this led to a Sh1.3 billion rise in interest expense.

KCB, which wants to buy troubled Imperial Bank, says it has strong capital buffers.