Growth driven by rise in interest income, fees and commissions from new business lines as Bank continued to implement its cost management initiatives.
KCB Bank Group saw its first quarter 2015 profit before tax rise by 12% to hit KShs. 6.2Billion on the back of higher interest income, fees and commissions arising from new business lines.
In trading results released today, KCB Group Chief Executive Officer, Mr. Joshua Oigara, said the growth in profitability from KShs. 5.6Billion over the same period last year was a result of a sustained push to grow non-funded income, as well as cost management initiatives across Kenya and the International businesses.
Total Assets: Up 24% from KShs. 411.4Billion to KShs 510.3Billion
Net Loans and Advances: Up 27% from KShs. 233.8Billion to KShs 297Billion
Customer deposits: Up 27% from KShs. 313.5Billion to KShs 397.1Billion
Shareholder Funds: Up 19% from KShs. 66.8Billion to KShs. 79.4Billion
Liquidity Ratio: 31.4% (CBK minimum-20%).
Long term debt funding: Up 24% from KShs. 10.3Billion to KShs. 12.7Billion
Profit Before Tax: Up 12% from KShs 5.6Billion to 6.2Billion
Net Interest Income: Up 11% from KShs 8.3Billion to KShs 9.3Billion
Fees and commissions: Up 19% from KShs 2.7Billion to KShs 3.2Billion
“The impressive earnings are as a result of a continued focus on the business to drive up non-funded income. Fees and commissions grew by 19% as a result of increased transaction volumes and new products which we have rolled out to meet changing customer needs,” said Mr Oigara.
“This is a confirmation that the catalytic investments we have been putting into the business through partnerships are increasingly bearing fruits. We see the partnership with Safaricom as a game-changer in the financial services sector. For us, such partnerships are meant to make financial services more accessible to the general population,” said Mr. Oigara.
During the period under review, Net Interest Income was up 11% from KShs. 8.3Billion to KShs. 9.3Billion while total operating income stood at KShs.13.9 Billion from KShs. 13.1Billion, as the Bank tightened its cost management initiatives.
The Group total assets increased 24% from KShs. 411.4Billion to hit the half a trillion mark at KShs 510.3Billion, cementing KCB’s position as the largest lender in the region by assets while net loans and advances were up 27% from KShs. 233.8Billion to KShs. 297Billion. With a history spanning more than a century, KCB is today the largest financial services organization in the Eastern African Region due to its large lending book, the stock of customer deposits and geographical footprint.
The financial results show that Customer deposits jumped by 27% from KShs. 313.5Billion to KShs. 397.1Billion, as did shareholder funds which edged up 19% from KShs. 66.8Billion to KShs. 79.4Billion.
The Bank continues to remain strong on all prudential ratios with core capital to total risk weighted at 17.1% (Revised CBK minimum-10.5%), total capital to total risk weighted assets at 18.1% (Revised CBK minimum-14.5%), core capital to total deposits at 21% (Revised CBK minimum-8%) and liquidity ratio at 31.4% (CBK minimum-20%).
KCB has recently heightened its investment in new business lines while seeking strategic partnerships while deepening existing ones as a spring-board of its Pan African agenda. Two weeks ago, KCB formally launched its newly created KCB Insurance Agency business with an eye at growing earnings from new business lines. The Insurance Agency proposition will initially be available in 98 of the Bank’s 187 branches in Kenya, before full roll out across the country and the region in the next 12 months. Prospects for the insurance agency are looking up, as it is already profitable. For the full-year ending December 2014, the agency saw profits rise by 268% (year on year growth) from KShs 42.23 million in 2013 to KShs 155.23 million.
In April this year, KCB Group launched its Islamic Banking unit as it seeks to tap into the growing demand for Islamic financial products across the East African region. The launch of “KCB Sahl Banking” paved the way for the full roll-out of Sharia’h compliant products and supports the financial inclusion agenda.
In the coming months, KCB plans to deepen its investment in the digital payments platform as Kenya and the East African region increasingly move into a cashlite economy which is billed as the next frontier for growth in the financial services sector.
Mid-last month, KCB Group rolled out an ambitious programme aimed at facilitating the collection of taxes across Kenya’s 47 counties. The revenue collection solution is part of the Bank’s wider initiative to enhance service delivery to citizens in the ongoing devolution process. The Bank has a strategic agreement with the Kenyan government to aid the disbursement of over KShs. 30Billion under the social protection programme for the aged, poor and disabled using a biometric card dubbed Inua Jamii.
Going forward into the remaining part of 2015, KCB hopes to leverage on advancements in technology to drive financial inclusion and improve customer experience within the East African region. The Group has recently rolled out M-Benki and Biashar@Smart (together with Safaricom), which are based on mobile phone platform.
In March, KCB launched the KCB M-PESA Account, the second product under the strategic partnership between KCB Group and Safaricom. This will allow customers to access loans based on their credit worth history while also enabling them to save on free deposit accounts and earn interest. “We have just started and we will deepen this. This partnership is built on long-term thinking. These are two businesses which have a similar long term vision of transforming lives in every market in which they have footprints,” said Mr Oigara.
In just one month, the KCB Mpesa product hit a major milestone by reaching 1 million accounts in just four weeks. KCB-M-PESA account holders are required to dial the USSD code *844# to see how much they can borrow and follow the prompts to secure the loan which will be sent to their KCB M-PESA accounts instantly. The loan amount is determined by the amount of savings that the customer has made, M-PESA balance, and their savings on both Safaricom and KCB platforms and usage of their suite of products.
“The 1 millionth customer is just a show of how this product is significant to our customers, the fact that one can borrow instantly from their phones for amounts ranging from Kshs.100/= for bus fare, KShs. 50/= to purchase airtime says a lot about the people accessing this credit facility at all levels of our society from a mama mboga. It is those little amounts that are making a difference in people’s lives showing how this innovation is driving financial inclusion”, said Oigara.