KCB Group has reinstated dividends with a proposed payout of Sh1.5 per share for the half year ended June, after its net profit surged 87 percent to Sh29.1 billion, helped by higher interest and non-interest income.
The dividend, amounting to Sh4.8 billion, will be paid on October 30 to shareholders on record as at September 12.
KCB last year skipped a dividend payment for the first time since 2002 as it sought to conserve capital and boost the capital base of its main subsidiary, KCB Bank Kenya.
The lender last paid a dividend of Sh6.4 billion (Sh2 per share) for the year ended December 2022.
“KCB Group demonstrated remarkable strength and adaptability amid global and local challenges, by delivering good asset growth and improved capital adequacy ratios. This performance has enabled the board to recommend an interim dividend of Sh1.50 per share,” said Joseph Kinyua, chairman at KCB Group.
The half-year profit jump is the fastest so far among publicly-traded banks and keeps KCB ahead of Equity Group on the net profit chart. Equity's net profit grew by 12.1 percent to Sh28.54 billion in the same period.
KCB's main subsidiary, KCB Bank Kenya, grew its net profit by 52.3 percent to Sh21.22 billion. National Bank of Kenya, another unit in Kenya which is wholly owned by KCB but is on course to be sold to Nigeria's Access Bank, recovered from a loss of Sh3.8 billion to a net profit of Sh828.74 million.
The group’s net interest income rose 34.8 percent to Sh61.33 billion on the back of higher interest rates and the loan book expanding to Sh1.032 trillion from Sh964.8 billion.
Non-interest income, which consists mainly of fees, commissions and foreign exchange trading income, rose 52.3 percent to Sh33.2 billion, pushing operating income to Sh94.6 billion from Sh73.07 billion.
“We delivered a commendable first half of the year, despite strong headwinds in the operating environment, especially in Kenya, thanks to the goodwill and confidence from our customers and commitment by our staff,” said Paul Russo, KCB's chief executive.
During the six months under review, KCB's operating expenses increased by 11.7 percent to Sh56.51 billion, driven by higher loan loss provisions, increased expenditure on staff salaries and an increase in other items. Staff costs rose to Sh19.28 billion from Sh17.46 billion.
The cost-to-income ratio, which measures efficiency, improved to 46.8 percent from 55.3 percent as income grew faster than operating expenses.
The lender increased its loan loss provisions by 19.7 percent to Sh12.2 billion during the period, while gross non-performing loans (NPLs) rose to Sh212.1 billion from Sh182 billion.
The increased stock of defaulted loans saw the NPL ratio rise to 18.5 percent at the end of June from 17.4 percent, with KCB attributing this to downgrades in Kenya and the impact of translating foreign currency denominated loans.
KCB's total assets rose to Sh1.976 trillion from Sh1.864 trillion, inching closer to the Sh2 trillion mark, while deposits rose to Sh1.49 trillion from Sh1.47 trillion.
