KCB GROUP’S  FORWARD LOOKING STRATEGY BEARS FRUITS

With a strong regional presence, KCB Group registers strong quarter three  results

KCB Group  has recorded an impressive 49% increase in profit after tax, reaching Kshs. 45.8 billion for the first nine months of 2024. Announced on 20^th November, 2024, at the Heart of Kencom, this performance marks a pivotal shift in the bank’s strategic direction, as it solidifies its position as a leading regional player in the financial sector.

The robust growth, which also saw revenues rise by 22% to Kshs. 142.9 billion, is attributed to a combination of strong performance from KCB Bank Kenya and the sustained momentum of its international subsidiaries. The bank’s diversification efforts, particularly its regional expansion into key African markets, have proven effective in delivering stable returns. The contribution from subsidiaries, excluding KCB Bank Kenya, grew significantly during the period,  accounting for 36.6% of the group’s profit after tax and 34% of total assets. This highlights KCB’s successful strategy of building a diversified revenue base beyond the Kenyan market.

Paul Russo, the Group CEO of KCB, noted that while the operating environment has remained challenging across the bank’s markets, its focus on providing tailored solutions for customers and leveraging local market insights has positioned it well for future growth. “We are optimistic about a strong end to the year, riding on improving market conditions and the strength of our people,” said Russo. His remarks reflect a broader vision.  KCB aims to tap into the growing regional trade and bridge opportunities across Africa, leveraging its extensive branch network and deep understanding of local cultures.

Building strong foundations across the region

A key highlight in KCB’s regional expansion strategy is its investment in assets and loans. As at  the end of September 2024, KCB’s total assets stood at Kshs. 2 trillion, underpinned by strong growth in customer deposits, which reached Kshs. 1.5 trillion.  By  the same token, the  bank’s net loans and advances surged to Kshs. 1.1 trillion, fueled by an increase in retail sector lending. These investments are a direct reflection of KCB’s commitment to scaling its operations and supporting the financial needs of businesses and  individuals across East Africa.

To support this growth,  KCB has been proactive in expanding its income streams. Its non-funded income (NFI), which includes transaction fees, foreign exchange income, and revenues from the Trust Merchant Bank (TMB), registered  strong performance. Additionally, KCB continues to focus on digital banking, enabling its customers to access services seamlessly from anywhere, which has been crucial in tapping into the regional market.

Regional partnerships

As KCB scales its operations, regional partnerships have played a pivotal  role in solidifying this  strategy. In October 2024, the bank secured a €230 million partnership with the European Investment Bank (EIB Global) to support small and medium enterprises (SMEs), youth, and women across Kenya. Through this partnership, KCB will direct €30 million toward women-led microenterprises, besides  allocating  €100 million to working capital and new investments. These efforts underline KCB’s commitment to supporting regional economic growth while fostering sustainable business practices.

KCB has also forged strategic collaborations to boost its regional trade capabilities. In partnership with Invest International, a Netherlands-based impact investor, the bank will open a dedicated hub in Kenya to support Dutch entrepreneurs seeking financing solutions in emerging markets. This partnership will help businesses across Africa access much-needed capital, further strengthening KCB’s position as a regional leader in facilitating trade and economic development.

Navigating economic challenges and enhancing shareholder value

Despite the challenges posed by  the  prevailing   economic environment, KCB has remained resilient, focusing on its core strengths while addressing the needs of its customers. The bank has worked towards  managing   its non-performing loans (NPLs), with provisions increasing by 12.2% to mitigate the impact of the rising NPL ratio. This prudent approach has allowed KCB to maintain strong capital buffers, with a return on equity improving to 25.6% from 19.6% last year.

Dr. Joseph Kinyua, KCB’s Group Chairman, emphasized that the bank is well-positioned to continue delivering strong value to  its  shareholders. “We foresee remarkable resilience with recovering economic conditions across markets,” said Dr. Kinyua. This observation  reflects the growing confidence in KCB’s ability to navigate the evolving economic landscape and emerge as a leading financial institution in the region.

As   KCB continues to scale its operations and enhance its regional presence, its focus on diversification, strategic partnerships, and strong capital management remains crucial. The group’s commitment to sustainability is also evident through initiatives such as the recent €540,000 Project Preparation Facility (PPF) secured from the Green Climate Fund (GCF) to support green projects for micro, small and medium  enterprises  (MSMEs ) in Kenya.

With its expanding network, diverse offerings, and solid financial performance, KCB Group is well on its way to becoming a key player in regional banking and financial services. Its vision of “connecting people to opportunities” continues to be realized through its innovative solutions, commitment to local communities, and forward-looking strategy.