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KCB Group posted Sh30.7 billion in net profit for the nine months ending September 30, 2023, as its assets soared to Sh2.1 trillion.

Profitability increased from Sh30.5 billion reported in a similar period last year, while the balance sheet expanded by 64.5 per cent from Sh1.28 trillion on the back of consolidation of the Group’s DRC-subsidiary Trust Merchant Bank (TMB) acquired in December 2022 and organic growth.

Group Chief Executive Paul Russo said the lender remained resilient despite the current economic and market environment, riding on diversified income streams which saw revenue increase by 27.3 per cent to Sh117.3 billion, driven by non-funded income.

According to the 2023 Q3 financial results, the contribution of group businesses, excluding KCB Bank Kenya to the overall profitability was up 27.9 per cent from 16.4 per cent as investments in regional businesses continue to pay off. Russo said the results were achieved on the back of a difficult period characterised by a tough operating environment which negatively affected the lender’s customers.

“Our performance was borne out of diligent implementation of our strategy, which saw us close the 16 per cent gap in profit before tax from the second quarter performance,” he added. The group’s focus, Russo stated, has been on speedy and sustainable resolution of customers’ pain points and ringfencing the business to guarantee long-term growth.

“It is upon this premise that we continuously innovate and deliver products with leading value propositions, in line with our resolve on opening doors of opportunities for all,” he said.

Balance sheet

Russo said with a solid and a diversified balance sheet, the group was now on track to meet its full year ambitions going by the improved performance in the third quarter, supported by resilient business segments and subsidiaries.

“We have made great strides investing in modernising both our hardware and application infrastructure to improve capacity and systems capability,” the CEO added.

In the review period, non-funded income increased by 38.7 per cent from Sh30.6 to Sh42.4 billion on enhanced investments in digital capabilities, while funded income was up 21.6 per cent to Sh74.9 billion from Sh61.6 billion on loans and Government securities growth, which offset the growth in interest expense from increased cost of funding.

Russo said as a result of prudence in credit management, the bank’s loan provisions increased by 118.1 per cent on additional cover taken up in Kenya impacted by depreciation of Kenya shilling on foreign currency denominated loans.

Total costs closed at Sh60.8 billion during the period, as a result of legacy legal claims at NBK, staff restructuring expenses and the TMB consolidation. KCB Group became the first bank in the region to surpass the Sh2 trillion mark in asset size, with assets worth Sh2.1 trillion at the end of September.

Customer deposits increased by 79.6 per cent to Sh1.7 trillion from Sh922.3 billion, while net loans and advances crossed the one trillion-shilling mark for the first time, with the loan book closing the period at Sh1.05 trillion, up from Sh758.8 billion on TMB consolidation and organic growth in existing markets.