Fred Aminga @faminga
KCB Group grew net profit by 18 per cent to Sh12.1 billion in the first six months of 2018 from Sh10.3 billion registered the previous year, in spite of a rough operating environment.
The financial institution attributed the profit to increased deposits, a surge in both interest and non-interest income coupled with a four per cent expansion of the loan book.
According to financial results released yesterday, the ratio of non-performing loans was stagnant at 8.5 per cent by June 2, which is same as ratio of bad debts posted in last year’s results.
Group Chief Executive Joshua Oigara said the bank was resilient in a rough operating environment which was further affected by credit crunch in key markets.
“We are seeing a more robust business that is responsive to our model of boosting non-funded activity, improving our financial strength and prudent management to consistently deliver stronger shareholder value,” he said while releasing the financial results. The institution with operations in Rwanda, Burundi, Tanzania, Uganda and South Sudan reported increase in net interest income by four per cent year-on-year to Sh24.1 billion.
It reported cutting costs on brick-and-mortar services by targeting growth in mobile, agency banking, point of sale terminals and ATMs whose volumes increased to 87 per cent compared to 13 per cent by branches.
Mobile banking volumes alone improved by 34 per cent despite number of transactions dropping slightly. A total of Sh156 billion exchanged hands through 26.6 billion mobile banking transactions.
Total income rose by three per cent to Sh35.6 billion from Sh34.6 of which 33.5 per cent was non-funded income while return on average equity increased by 23.5 per cent from 21.1 per cent.
Looking into the second half of 2018, Oigara said the group foresees strong growth on an improved macroeconomic environment, especially in Kenya and expect improved investor confidence in South Sudan on the back of the newly-signed peace agreement..
The group’s core capital as a proportion of its total risk weighted assets closed the period at 15.7 per cent representing a 520-basis point buffer on the Central Bank of Kenya statutory minimum.
Following the results, the directors approved a payment of an interim dividend of Sh1 per share.