Growth in loans, prudent cost management initiatives lift KCB Group’s Q3 pre-tax profit to Sh22.9 billion

Strong loan growth in its Kenya business and prudent costs management initiatives helped push KCB Group’s pre-tax profit up 18.3 per cent in the third quarter of 2016.

During the period under review, profit before tax for the nine months ending September 30, 2016 rose to Sh22.9 billion from Sh19.3 billion during the same period last year.

KCB Group CEO and MD Joshua Oigara says the group recorded a 27 per cent growth in net interest income, driven by asset book growth, better yields and a reduction in the cost of funds.

“The performance reflects continued resilience across the seven markets that we operate in. The business benefitted largely from a diversified income structure, prudent cost management and deliberate investments in infrastructure and digital channels,” said Mr. Oigara while releasing the results.

“The third quarter financials showed that total expenses increased by 7 per cent to support business growth, investment in channels and infrastructure. Provisions for bad debts reduced by 11 per cent to Sh3.4 billion in September 2016 while overall Group gross nonperforming loans declined by Sh1.9 billion on a quarter to quarter basis on the back of enhanced Credit processes and recoveries,” the lender said in a statement.

Oigara said that in the month of August 2016, the bank successfully re-implemented an upgrade of its core banking system, T24, to boost operational efficiencies, facilitate technology innovation, and allow for easier interface with other platforms and increase reliability.

“The new system offers increased functionality and great customer experience and is a firm base for our journey towards a service-oriented architecture in line with our customer strategy,” he explained.

The Group’s total assets declined by 6 per cent year on year attributed to currency devaluation in its South Sudan market while total assets without the South Sudan component increased by 10 per cent as the pressure on the South Sudan Pound continues to grow since December 2015 when the currency was floated.

Mr Oigara said the Group’s asset book is poised to grow steadily as the Bank makes bigger investments in technology systems and digital platforms to support the business while consolidating the international business.

“We see the new fin-tech capabilities giving us a strong business position and stable performance in the coming years as the future of banking shifts into digital,” he said.

 

The financials indicate that net loans and advances were up 5 per cent from Sh347.6 billion to Sh364.5 billion during the period largely driven by the Kenya business, which registered an 8 per cent growth.

The number of KCB clients currently accessing the lender’s services via their mobile phones stands at 10.2 million, while the number of mobile accounts grew by 98 per cent from 4.3 million in Quarter 3 of 2015 to 8.3 million in a similar period this year.

 

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