KCB Group PLC has reported a net profit of KShs. 9.8 billion for the first quarter of 2023, demonstrating strong financial performance and increased revenues.

The Group's total assets reached an impressive KShs. 1.63 trillion, reflecting significant growth supported by customers' trust and confidence in the face of challenging economic conditions. The Group remained committed to assisting customers in navigating the tough economic environment while safeguarding business prospects and promoting growth.

Revenue witnessed a substantial increase of 26.9%, reaching KShs. 36.9 billion. This growth was primarily driven by non-funded income generated from customer transactions across the Group's network and the integration of Trust Merchant Bank (TMB), the Group's subsidiary in the Democratic Republic of Congo. These results highlight the diversified income streams across the Group's businesses, which adequately covered operational and funding costs.

The profitability of Group businesses, excluding KCB Bank Kenya, significantly contributed to the overall performance, accounting for 35% compared to the previous figure of 17.2%. The contribution to total assets also improved, reaching 38.2%.

KCB Group CEO Paul Russo commented on the performance, stating, "Our focus was on delivering value and support to customers to help them navigate the tough economic environment while driving revenue growth for the Bank. The first quarter performance highlights the resilience of the business across the corporate and retail franchises. The regional businesses performed well, giving credence to the regional expansion strategy."

Russo added, "During the period, we continued to embed customer obsession across the Group to position it as the key pillar through which we deliver our strategy. We continuously pursued innovations and delivered products with leading value propositions. We are deliberate on driving stronger growth, on the back of delivering value to customers, growing the existing businesses, opening new frontiers, and implementing a tight cost management regime."

Q1 2023 Performance Highlights
  • Non-funded income (NFI) experienced remarkable growth of 59.2% to KShs. 14.8 billion, driven by enhanced digital capabilities. This resulted in 99% of customer transactions being conducted seamlessly and securely through digital channels.
  • Trust Merchant Bank (TMB) made an impressive contribution, emerging as the Group's second-largest subsidiary. TMB reported a profit before tax of KShs. 1.9 billion in the quarter, contributing 14% to the Group's total assets.
  • Costs increased by 46.1% due to the consolidation of TMB and expenditures related to supporting additional revenue generation.
  • Provisions rose by 99% as a result of increased credit risk and the impact of forex devaluation in Kenya. This prudent step was taken to address the challenging operating environment, which had a significant impact on asset quality.
  • The ratio of non-performing loans (NPL) stood at 17.5%, primarily driven by downgrades in the KCB Kenya business. The Group is actively focused on recovery efforts and proactive management of the lending portfolio to enhance asset quality.
  • Total assets grew by 40% to KShs. 1.63 trillion, solidifying KCB's position as the largest bank in Eastern Africa. This growth was fueled by increased loans, investments in government securities, customer deposits, and additional borrowings.
  • Customer loans rose by 32% to KShs. 928.8 billion, reflecting increased lending across the Group. Customer deposits also grew by 41.5% to KShs. 1.20 trillion, driven mainly by TMB and additional deposits from existing businesses.
  • Share holders' funds experienced a 17% growth, reaching KShs. 214.8 billion, attributed to the increase in accumulated profits for the year.
The Group maintained robust capital buffers, surpassing regulatory limits. The core capital as a proportion of total risk-weighted assets stood at 13.6%, well above the statutory minimum of 10.5%. Additionally, the total capital to risk-weighted assets ratio reached 17.0%, exceeding the regulatory minimum of 14.5%. All banking subsidiaries remained compliant with their respective regulatory capital requirements.

Looking ahead, KCB Group Chairman Andrew Kairu emphasized the Group's vision of becoming a significant regional player, moving beyond its growth driven primarily by Kenya. Kairu expressed optimism about improved performance in the remaining quarters of the year, despite the challenging environment that has affected customers and the economy as a whole.

Several key corporate developments were also noted during the period. The Group successfully reorganized its subsidiaries, resulting in the rebranding of KCB Capital Limited to KCB Investment Bank and the transformation of NBK's National Trustee and Investment Services Limited (NTISL) into KCB Asset Management. These changes aimed to create a formidable investment products powerhouse and diversify operations across the Group.

Moreover, KCB Bank Kenya and National Bank of Kenya signed a distribution deal with Sanlam Life Insurance to enhance the uptake of life insurance products. Through their respective bancassurance franchises, KCB Bancassurance Intermediary Limited (KBIL) and National Bank Bancassurance Intermediary Limited (NBIL), customers gained access to a wide range of financial and investment products. This collaboration also facilitated the introduction of an endowment product.

The Group continued its focus on supporting micro, small, and medium-sized enterprises (MSMEs) that play a vital role in the region's economy. To provide increased lending to this segment, the Bank revised terms for working capital and asset-based finance. Additionally, digitization and automation efforts were accelerated to streamline the credit processing journey, including the deployment of prescoring models.

Aligning with its new brand purpose, "For People, For Better," the Group aims to position itself as the undisputed leader in financial services, prioritizing the diverse needs of its millions of customers to improve their lives. Guided by the values of proximity, connectivity, and courage, the Group continues to embed sustainability in its strategy, supporting clean energy transitions and operating in an environmentally and socially responsible manner.

The Group's commitment to social impact is evident through its engagement in citizen-driven initiatives and its high school scholarship program, which has expanded its reach to benefit 1,326 high school students and 217 tertiary scholars from disadvantaged backgrounds.