Good Start as KCB Records 10% Pretax Profit Growth to KSHS.1.9 Billion and Announces Reduction in Base Lending Rate to 13.5%

KCB Group has announced a 10% increase in pretax profit to KShs.1.9 billion, and a 29% growth in total assets to KShs.220 billion as at 31st March 2010.

KCB Group Chairman, Peter Muthoka, released the Q1 trading results reflecting KShs.1.9 billion in Pre-tax profits up from KShs.1.73 billion during the same period in 2009.

“This is a very good start to the year 2010 following a difficult period last year and we are optimistic we shall record good growth over the remainder of the year,” said Muthoka.

Commenting on the results, KCB Group Chief Executive, Martin Oduor-Otieno, said the good results reflected the economy’s improving fortunes after a tough year, KCB’s ongoing growth in funded income and deliberate efforts to reduce operating expenses.

“Our net interest income went up by 10% to KShs.3.9 billion from KShs.3.5 billion over the same period in 2009 with fees and commissions growing by the same margin to KShs.1.5 billion from KShs.1.35 billion over the same period last year,” said Oduor-Otieno.

The bank’s total operating income increased from KShs.5.7 billion to KShs.5.9 billion, and we realized net recoveries of bad debts previously provided for.

The bank’s asset book grew by 29% to KShs.220.7 billion following a 27% increase in net loans and advances to KShs.125.9 billion from KShs.99.2 billion in 2009 and a 43% growth in deposits to KShs.185.4 billion up from KShs.129.2 billion over the same period in 2009.

“We continue to attract a good mix of customer deposits with current accounts totaling KSh96.9 billion, transaction accounts at KSh34.8 billion, term deposits at KSh49.2 billion and savings accounts at KSh4.4 billion,” said the Chief Executive.

The increase in liabilities shored up the bank’s liquidity ratio to 39.3% up from 28.1% over the previous period while total capital to total risk weighted assets (14.2%) and core capital to total risk weighted assets (14.1%) remained stable.  The Core Capital/total deposit liabilities ratio remained strong at 11.6%.

“We have a very large balance sheet and our ratios remain very strong enabling us to maintain our capacity to continue to serve the diverse financing needs of the market,” said the Chief Executive.

Oduor-Otieno reiterated that KCB had reduced its base lending rate from 15% to 13.5% in line with the positive trends in the market as a way of supporting Kenya’s economic growth by encouraging borrowing.

“Our base rate is among the lowest in the market and will boost businesses through the reduction in the cost of credit,” he added.

Chairman Peter Muthoka commended staff and management for the good start to the year saying it laid the foundation for strong growth in 2010.

“The year 2010 is for consolidation through efficient management of our resources, cost reduction, product and service innovation as well as growth in market share and this performance lays the foundation for us to increase stakeholder returns,” he said.

KCB remains the largest bank in the region in terms of branch and ATM networks and total assets.  Currently, KCB has 168 branches in Kenya, 13 in Uganda, 11 in Tanzania, and nine in Rwanda and   Southern Sudan, respectively.

“We will respond to business needs in terms of network expansion.  However, in 2010 we shall focus on increasing productivity from our existing network in order to improve profitability,” said Oduor-Otieno.

KCB also has the largest number of automated teller machines with a total outlay of 343 proprietary machines and access to 110 PesaPoint units and over 250 Kenswitch outlets.

“Our QuickServe ATMs are VISA certified and we are currently issuing VISA Electron cards to further enhance the accessibility of customer funds locally and internationally,” said Oduor-Otieno.

The Chief Executive said KCB was in the process of testing a new internet banking product to increase its channel options for the convenience of its customers.

“KCB Connect, our mobile telephone banking proposition, has done very well and we expect our youthful and high network individuals and corporate clients to embrace our forthcoming internet banking offering as well,” said the Chief Executive.