KCB Group Plc recorded a historic 74% rise in profit after tax for the full year ending December 2021, riding on economic recovery across markets.
Net profit grew to KShs.34.2 billion compared to KShs.19.6 billion a year earlier, on the back of increased income, cost management and lower credit provisions which saw the Group post higher returns to shareholders.
“We made significant progress in achieving our 2021 strategic targets which delivered a strong financial performance that was in line with gradual economic recovery across all markets. The third and fourth quarters were the turning point with a pick-up in lending activity even as the COVID-19 pandemic continued to impact on economic activity,” Commentary- Group CEO & MD Joshua Oigara.
“During the period, we deliberately focused on supporting customers to weather the healthcare storm. We expect good business momentum this year with a projected economic recovery across markets.”
Revenues increased by 13.5% to KShs.108.6 billion on account of a rise in net interest income which was up 15.0% to KShs.77.7 billion. Non funded income grew by 9.9% to KShs.30.9 billion on increased customer transactions, FX income and income from accelerated loan growth.
Costs went up by 11.9% to KShs.47.8 billion from KShs.42.8 billion on account of an increase in staff and organisational costs, consolidation of Banque Populaire du Rwanda (BPR) and inflationary adjustments across the group. Other operating expenses increased marginally by 2.8% to close at Kshs 22.9B from Kshs 22.3B last year with improved cost management across the Group.
Key Financial Highlights
- Profit after Tax – Up 74% to KShs.34.2 billion compared to KShs.19.6 billion.
- Revenue – Increased 13.5% to KShs.108.6 billion on account of increase in interest income driven by increase in earning assets, non-funded income, and lower cost of funding.
- Costs – Up by 11.9% to KShs.47.8 billion.
- Total Assets – Increased 15.4% to KShs.1.139 trillion.
- Customer Loans – Increased by 13.5% to KShs.675.5 billion through organic and strategic acquisitions.
- Customer Deposits — increased 9.1% to KShs.837.1 billion due to organic growth mainly in the Kenyan market.
Loan Provisions & Asset Quality
The ratio of non-performing loans (NPL) increased from 14.7% to 16.5%, signaling the longer-term effects of COVID-19 impact. Several key sectors, largely construction, hospitality, and manufacturing continued to come under pressure with slow recovery. Provisions for the period reduced by 52% to close at KShs.13.0 billion from KShs.27.2 billion a similar period last year. The decrease is largely due to lower corporate and digital lending impairment charge after the deliberate action on covid related provisions absorbed in the previous year.
Balance Sheet Growth
The Group further grew its balance sheet with total assets rising by 15.4% to KShs.1.139 trillion, driven by organic growth across our businesses and acquisition of BPR.
Customer deposits went up by 9.1% through acquisitions and additional customers in corporate and retail franchises across the Group.
The net loan book clocked KShs.675.5 billion on increased lending to key segments such as Micro Small and Medium Enterprises, consumer and corporate.
Shareholders’ funds grew 20.6% from KShs.142.4billion to KShs.171.7 billion on improved profitability for the period.
Capital adequacy & Regulatory Compliance
The Group maintained healthy buffers on its capital ratios over the minimum regulatory requirement, giving the Group a strong headroom for growth. Core capital as a proportion of total risk weighted assets closed the period at 18.0% against the Central Bank of Kenya statutory minimum of 10.5%. Total capital to risk-weighted assets ratio was at 21.7% against a regulatory minimum of 14.5%.
The Board of Directors has recommended a final dividend of KShs 2.00 per share. This follows an interim dividend of KShs 1.00 paid out in January this year. The final dividend will be payable to the members of the company on the share register at the close of the business on Monday 25 April 2022. If approved, the full dividend per share for the year ended 31 December 2021 will be KShs 3.00 for each ordinary share.
The Group successfully completed the acquisition of BPR on July 31, 2021 and has kicked off integration activities that will see the amalgamation of BPR and KCB Bank Rwanda into a single banking business.
“The benefits of our regional expansion continue to positively contribute to the KCB’s performance. In 2021, the profit before-tax contribution from Group businesses went up to 13.7%, putting us on track towards our 20% target this year. KCB will continue exploring and pursuing attractive regional expansion opportunities to enhance our regional participation, accelerate growth, and maintain sustainable long-term performance,” said KCB Group Chairman Andrew Wambari Kairu. “Our future has additional opportunities to exploit, details of which will be communicated as they develop” he added.