KCB profile improves on credit ratings boost

NAIROBI: Kenya Commercial Bank (KCB) has received high ratings from ratings agencies Moody’s, and Standard and Poor’s, lifting the lender’s profile as East Africa’s largest commercial bank by asset base.

S&P gave the lender a ‘B+/B’ long-term and short-term credit rating, while Moody’s gave it a B1 rating, with both agencies giving KCB a stable outlook.

“KCB’s ratings reflect its strong profitability metrics supported by a strong domestic franchise, business growth prospects and strategic initiatives,” reads a statement from Moody’s on the rating.

“KCB’s profitability metrics benefited from recent efficiency improvements amid a staff transformation programme, and the bank’s continued focus on operational efficiency and leveraging on the revamp and expansion of its lower-cost alternative distribution channels.”

Earlier this year, KCB signed a partnership with mobile services provider Safaricom allowing customers of either provider to access loans of between Sh50 and Sh1 million, payable between one and six months.

This deal came on the back of an aggressive move to widen the bank’s agency network, KCB Mtaani, which has seen it increase earnings outside traditional revenue streams.

According to the company’s report for the first half of 2015-16, its agency network grew 39 per cent over this period to 11,000 outlets.

The lender further recorded 972,491 loan applications, a 330 per cent growth, with 71 per cent of them on its mobile banking platform.

DIGITAL CHANNELS

“KCB’s deposit-funded profile is a further credit strength supporting the ratings, with deposits accounting for 91 per cent of total liabilities as of June 2015,” added Moody’s.

The agency further expects KCB to maintain its deposit-funded domestic franchise over the next few years.

In June this year, KCB posted half-year net profits of Sh9.2 billion, a 13 per cent rise from Sh8.2 billion recorded over a similar period last year.

The bank’s mobile and digital channels account for 69 per cent of transactions, with its loan book and customers deposits at Sh321 billion and Sh443 billion, respectively.