Global rating agency Fitch has accorded KCB Group #ticker:KCB a stable outlook with a B+ score, on the back of solid earnings and a strong capital buffer.
The agency also cited the bank’s strong domestic retail and corporate franchise and management quality, a well-structured deposit-based funding model, high level of liquidity assets and stable customer deposits.
“Fitch has assigned long-term issuer default ratings (IDRs) of ‘B+’ to KCB Group Plc (KCB Group) and its main and wholly-owned operating subsidiary KCB Bank Kenya Limited (KCB Bank), with stable outlook,” the agency said in the latest assessment.
The agency said the national ratings assigned to KCB Group and KCB Bank reflect Fitch’s view of relative creditworthiness within Kenya, and are based on the standalone financial strength.
Fitch said as business activities are concentrated in Kenya, neither KCB Group nor KCB Bank can be rated above the sovereign (B+).
“The stable outlook therefore reflects the stable outlook on the Kenyan sovereign rating,” the agency said.
Fitch said KCB’s strategy hinges on consolidating its position in existing markets and growing the customer base by utilising digital banking channels.
KCB Group chief executive Joshua Oigara said the bank’s outlook reflects the lender’s ability to meet its financial commitment. He said the group is well positioned to support the customers’ financial wellbeing.
“The rating is significant for the bank and we remain committed to continue improving our competitive position in key products and services across the region,” said Mr Oigara.
In February, Moody’s Investors Services downgraded KCB Group, alongside Equity and Co-operative banks to B2 (stable outlook) from B1 (rating under review outlook), following the weakening of the sovereign credit profile.
The bank said it had made Sh5.1 billion net profit in the review period compared to Sh4.5 billion a year earlier, riding on a 5.8 per cent loan book growth that raised interest income 11 per cent to Sh15.6 billion.
KCB also benefited from lower loan loss provision of Sh600.2 million, down from Sh958.1 million in the same quarter last year despite a 36.1 per cent surge in gross defaults to Sh43.7 billion.