The KCB Group’s 2010 trading performance continued to grow as the bank announced a 16% increase in pretax profit for its first half of the year to KSh4.2 billion. After tax profit increased by 19% to KSh2.9 billion up from KSh2.4 billion the same period last year.
KCB Group Chairman, Mr. Peter W. Muthoka, told media and investors that the bank’s first half pretax profit increased from KSh3.6 billion during the same period in 2009 to reach the new level owing to improved efficiencies, cost management initiatives and enhanced product marketing.
Mr. Muthoka attributed the performance to a 24% growth in net interest income from KSh7.1 billion in the first half of 2009 to KSh8.8 billion and a 16% increase in fees and commissions from the KSh2.6 billion level in the second quarter of 2009 r to KSh3 billion.
Commenting on the performance, KCB Group Chief Executive, Dr. Martin Oduor-Otieno, said the increased momentum reflected the recovery of Kenya’s economy hit hard last year by global recession and a confidence crisis in the world’s financial sector.
The bank’s total operating income grew by 15% from KSh11.4 billion during the same period in 2009 to KSh13.2 billion in June, 2010 against a 20% increase in total operating expenses to KSh8.6 billion up from KSh7.2 billion the previous period.
In spite of the increase in costs, KCB is seeing stability in their operating expenses. KCB attributes the current increase in costs to ongoing marketing activities and continued investment in information technology platform.
The bank’s assets went up by 27% to stand at KSh226.1 billion at the end of the second quarter of 2010 from KSh177.8 billion during the same period in 2009. Net loans and advances topped KSh130 billion up from KSh103.7 billion, a 25% growth during the period under review. Deposits increased by 50% from KSh127.6 billion in June 2009 to KSh192 billion this year.
Dr Oduor-Otieno said that KCB continue to lead the market in terms of assests due to significant increase in deposits and loans as a result of extensive marketing initiatives and utilization of their wide branch network.
Current accounts formed a significant portion of the bank’s deposits at KSh108.7 billion with transaction account balances (KSh36 billion) and call deposits (KSh42 billion) complementing the largest deposit base of any bank in the East African region.
Shareholder funds were enhanced by 11% to move to KSh23.4 billion in June this year from KSh21.1 billion over the same period in 2009.
The bank’s prudential ratios remained above Central Bank of Kenya’s minimum levels with core capital to total deposits liabilities at 10.6% (CBK minimum -- 8.0%), core capital to total risk weighted assets at 13.1% (CBK minimum – 8.0%), total capital to total risk weighted assets at 13.2% (CBK minimum – 12.0%) and liquidity at 36.3% (CBK minimum – 20.0%)
KCB`s capital ratios have dropped considerably since December 2009 due to their ongoing growth but they expect that pressure to reduce when they get the proceeds of the ongoing KCB rights issue.
Chairman, Mr. Peter W. Muthoka, said the Board was confident the bank will achieve its profitability targets for 2010 with the momentum expected to peak in the third quarter of the year.
The KCB Rights Issue will provides a strong platform for the bank to grow its assets and yield better returns to shareholders.KCB is hoping that all shareholders will take up their rights in order to give our business the growth impetus it requires to become more profitable into the future.
Oduor-Otieno said the bank had completed the rollout of its new IT system, T24, to all businesses across the region setting the scene for a unique one-branch banking platform.
They have just finished installing the system in KCB Tanzania, which was the last in line and their focus now shifts to reaping the benefits of this state-of-the-art technology.
The bank expects to utilize its new system to launch modern technology- driven products and services, modernize its processes and enhance operational efficiency.
