By Wambui Odhiambo
Kenya Commercial Bank Group profit has shot
up in the year 2019
after Tax return up 5% to 25.2 billion Kenya
Improved Profitability and shareholder returns
driven by loan growth,non-funded income , cost
management and NBK acquisition.
Delivered improved Profitability and higher
returns to shareholders for the full year ended
December 2019, posting a 5% jump in profit
after tax to KShs.25.2 billion.
Net earnings increased from KShs.24 billion in
2018 on the back of loan book growth, non-
funded income from the digital banking and
cost management initiatives across the
Net Profit–Up 5% to KShs.25.2B from
KShs24.0B Total Operating Income- Up17%
from KShs.71.8Bto KShs.84.3B
Operating Expenses (exclprovisions)-up 10.0%
from KShs.35.0B to KShs.38.5B. Cost to Income
Ratio (excl.provisions)–45.7% Cost of
Funds-2.8% from 3.2%
Total Assets- up 25.8% from KShs.714.3B to
Kshs.898.6B Total capital to risk weighted
Core capital to total risk weighted assets-
Non Funded Income 33.4% from32%Return
Equity-20.7% NPL Coverage- (IFRS)-72.1% from
68.6% Liquidity Ratio-37.1% from33.3%
KCB Group CEO and MD, Joshua Oigara said
the business remained resilient despite the
challenging economic conditions witnessed in
the various markets and the wider global
“The East African region continued to face
various down side risks that ranged from
adverse weather patterns to stress from
currency fluctuations and the pressure from oil
imports ”he said while releasing the results in
Nairobi on Thursday. “All business lines were
strong on both funded and non-funded income
as cost control, operational efficiency and
driving excellent customer experience remained
a top priority,” said Mr. Oigara.
Both the Kenya business and the international
subsidiaries delivered strong income growth.
Acquisition of National Bank of Kenya (NBK)—a
transaction that was finalised in the last quarter
of 2019—solidified the Group’s base from a
revenue and balance sheet position.
Total income increased 17% to KShs.84.3
billion while operating expenses grew much
slower by 10%, resulting in an improved cost to
income ratio of 45.7%, compared to 48.7% the
Net interest income expanded 15% to KShs.
56.1 billion from KShs.48.8 billion primarily due
to a 17% growth in loan book, digital lending
and additional interest income from NBK.
Fees and commissions surged 39% to KShs.
19.8 billion on diversified income streams.
Enhanced investments in digital channels
pushed non funded income up 22.6% to KShs.
28.2 billion from KShs.23.0 billion in 2018.
“Our investments in diversified channels are
giving our customers a means to access
banking services conveniently, at a competitive
prices and in line with our purpose of
simplifying their world to enable their progress”
said Mr Oigara.
During the year under review, the number of
non-bank transactions increased to 97% with a
majority of them conducted via mobile devices.
Mobile loans advanced increased to KShs.212
billion from KShs.54 billion in 2018.
The cumulative disbursement via mobile over
the past five years totaled to KShs. 319 billion.
Cost Management and Efficiency
At KShs.38.5 billion, totalvpre-provision
operating expenses were relatively contained
due to cost efficiency measure, growing from
KShs.35.0B billion, largely driven by staff costs
which went up13.4% in part due to the
acquisition of NBK.
KCB maintained its lending pattern in 2019,
growing assets base despite lower asset yield,
observed in the key market—Kenya—due to
reduction of the benchmark lendingrate.
Total assets surged 26% to KShs.899 billion
from KShs.714 billion in 2018.
The key drivers for this growth were the loan
book growth of 17% to KShs
535.4 billion—reflecting the strong lending
pipeline primarily driven by retail and corporate
banking customersegment—and the customer
deposits growth of 28% to KShs.686.6 billion.
The main driver for this growth was acquisition
the National Bank of Kenya (NBK) .
The ratio of non-performing loans to total
balance loan book increased to 10.9%
(7.4%excl.NBK), well below the industry average
As a result, provisions for impairment increased
to KShs.899 billion from KShs.2.9 billion.
The key sectors driving this deterioration in
asset quality were trade, tourism and
manufacturing sectors within the corporate
banking book and on the mobile loan portfolio.
The stock of NPLs increased to KShs.63.4
billion (KShs.38.5 billion excludingNBK) up from
KShs 32.7 billion in 2018, following
consolidation with NBK.
Overall, the business continued to generate
good returns for its shareholders averaging a
return on equity of 20.7% in 2019.
Shareholders’ equity was up14.1% from
KShs113.7 billion to KShs.129.7 billion.
KCB distributed part of the Profit by way of an
interim dividend of KShs1.0 per share in the
course of 2019.
KCB Group Board has proposed a final dividend
of KShs.2.5 per share to be presented to
shareholders in the Annual General Meeting to
be held in May this year.
KCB Group maintained healthy buffers on its
capital ratios over the minimum regulatory
All banking subsidiaries metregulatory capital
requirement with the exception of NBK which
was below total capital requirement.
This is expected to be addressed within the first
half of 2020 through various initiatives at NBK.
The Group’s core capital as a proportion of total
risk weighted assets closed the period at 17.2%
against the Central Bank of Kenya statutory
minimum of 10.5%.