KCB GROUP ON COURSE TO DISPOSE NBK

Four years after acquiring National Bank of Kenya (NBK), KCB Group has reached a decision to sell NBK to Access Bank, a Nigerian lender. This is on account of the losses bore by the unit which has been in existence for 100 years. According to Paul Russo, Group CEO of KCB Group, to continue with the unit’s operations, KCB would be required to fund NBK with fresh Ksh.5 – 8 billion to comply with the Central Bank of Kenya (CBK) minimum capital ratios.

The move to dispose the unit comes as the bank released its full year 2023 financial results in which it posted Kshs.37.5 billion net profit for the full year ending December 31, 2023. In the review period, revenues grew by 27.2% with strong funded and non-funded lines.

The Group’s total assets crossed Kshs.2 trillion mark with a 40% growth to close at Kshs.2.17 trillion funded by an increase in customer deposits despite the tough operating environment. Revenues increased to Kshs.165.2 billion, boosted by funded income from earning assets.

That notwithstanding, KCB ended the financial year of 2023 with both core and total capital ratios having a buffer of 1.3 percentage point. This is in comparison’s to 5.1 and 3.1 percentage points in the five prior years. The thin buffer led to the bank to skip dividend payout to its shareholders for  the first time in 21 years in bid too conserve capital to meet required thresholds by CBK.

Non-funded income’s growth of  33.9% was supported by increased transactions across the network, adoption of the digital banking and alternative channels, entry into other markets and trade finance business. Net interest income also increased by 23.9% withstanding the high cost of funds in the market. Commenting, Group CEO of KCB, Paul Russo said: “We had a fairly good run in the 12 months in the wake of difficult economic times, with most of the business lines achieving strong organic growth. We have extended a helping hand to our customers through our loan book to support them to navigate and accomplish their ambitions. As a result of growing customer trust in the brand, we saw deposits grow significantly during the period.”