KCB gives Government KShs523 million Dividend

KCB Group has presented a cheque of KShs.523,600,000 as dividend payment to the Government for its 23.6 per cent shareholding in the Group for the year 2009. 

The cheque was presented by KCB Group Chairman, Peter Muthoka and Chief Executive Dr Martin Oduor-Otieno to Permanent Secretary Treasury Joseph Kinyua at the Treasury Offices.   

KCB returned a modest albeit encouraging performance, making a pre-tax profit of KShs6.3billion; a 5 percent growth from its 2008 performance. This saw shareholders approve a dividend payout of KShs1 for every ordinary share held amounting to KShs.2.2 billion in the annual general meeting held in May. 

Speaking during the cheque handover, Mr. Muthoka said profit margins in the financial sector remained constrained owing economic challenges, such as the global recession, which undermined the profitability of banks and other financial institutions. 
“However, our business is growing at a very commendable rate with our assets now at KShs220 billion, way above the nearest competitor in the regional market,” said Mr. Muthoka.

This growth has put pressure on the bank’s prudential ratios and is limiting the extent to which it can grow its loans and deposits.
The bank hopes to raise additional KShs15 billion capital through a rights issue that commences trading at the Nairobi Stock Exchange (NSE) on 1st July 2010. The funds will be utilized to support its growth plans over the next five years and beyond.
“We believe we will be able to raise this money from our shareholders who have shown consistent faith in our plans as evidenced in the rights issues of 2004 and 2008,” added the Chairman.  

After two years of successful infrastructural expansion in the Eastern Africa region, the Group now plans to consolidate its business to take advantage of its regional footprint.
“We have under the leadership of the Board agreed to focus a lot more on driving value out of this wide branch network hence slowing down further expansion in order to deliver returns on the investments we made,” said Oduor-Otieno.

The bank has put in place measures to improve its performance, such as the new core banking system that has now been rolled out to Kenya, Southern Sudan, Uganda and Rwanda. The system is set to rolled out in Tanzania this month.

It has equally introduced new products and services targeting the youth, the bottom of the pyramid market such as the Small and Medium Enterprises and Micro-banking propositions; as well as other niche segments.