KCB Becomes Most Profitable Bank In East Africa After KSh 16.5 Billion Q1 Net Profit

• Kenya Commercial Bank (KCB) reported growth in net profit in the first three months of the financial year 2024
• The lender gained 69% growth in profit from KSh 9.8 billion reported in Q1 of 2022 to KSh 16.5 billion
• KCB Group chief executive officer (CEO) Paul Russo attributed the growth to continued customer loyalty, which has seen it regain its market spot

KCB Group's net profit increased to KSh 16.5 billion in the first three months of 2024.

This was a 69% growth from KSh 9.8 billion, which saw the bank regain its position as East Africa’s most profitable Bank and largest lender by assets.

What drives KCB Group's profit?

KCB Group Chief Executive Officer Paul Russo attributed the growth to customers' and clients' trust in the bank's services.

“Despite a difficult operating environment across the region, we saw a strong revenue performance in the business as we entrenched prudent credit, liquidity, cost, and overall risk management.

"Consumer deposits continued to grow, a show of confidence that our clients have in the brand. Our deliberate investments in digital and payments capabilities, as well as our regional expansion approach, continued to deliver impressive results,” said Russo during the release of the results on Wednesday, May 22.

From the financial statements, the lender's total revenues increased by 31.6% to KSh 48.5 billion driven by both funded and nonfunded lines.

The Group's total assets gained 22.4% to KSh 2.0 trillion, funded by an increase in customer deposits from all segments withstanding the tough operating environment.

Customer Deposits increased to KSh 1.5 trillion, representing a 25.4% growth driven largely from the Kenyan market.

How much in loans did KCB disburse in Q1 2024?

Customer loans increased 12.2% to KSh 1.13 trillion from additional advances to support customers' business activities.

The loan impairment charge was up by 53.4% from downgraded facilities.

The bank's gross nonperforming book stood at KSh 205.3 billion, which saw the NPL ratio close the quarter at 18.2%.

The lender attributed this to downgrades in Kenya and the impact of the translation of the foreign currency-denominated book.

KCB Group Chairman Dr Joseph Kinyua noted that the lender is optimistic about the business prospects in the remaining part of the year.

"We have made tangible progress to sustain superior shareholder value by delivering strong financial performance while driving our agenda to build a future-proof business. Prudent deployment of our capital has ensured that we were able to remain resilient and deliver for our stakeholders,” said Kinyua.

What was KCB's profit for 2023?

The Group reported a full-year net profit of KSh 37.5 billion for the fiscal year ending December 31, marking an 8.3% decline from the previous year's figure of KSh 40.8 billion.

The profit decrease is attributed to a significant surge in operating costs, including a KSh 4.3 billion legal claim against the National Bank.

Total assets surged by 40% to KSh 2.2 trillion, propelled by increased customer deposits and loans primarily within KCB bank.

Equity Bank profit

Meanwhile, Equity Bank recorded a KSh 16 billion profit after tax for the period ending March 2024.

The bank's results signified improved performance after the lender recorded a profit decline for the year ending December 2023.

Equity Bank CEO James Mwangi said the new trend was due to an increase in deposits, network expansion, a growing customer base (20 million), and a rapidly growing insurance business.

Proofreading by Mercy Nyambura Guthua, journalist and copy editor at TUKO.co.ke