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KCB ups dividend to Sh10.7bn as profit hits Sh24bn

KCB Group CEO Joshua Oigara
KCB Group CEO Joshua Oigara at an investor briefing on March 6, 2019. PHOTO | DIANA NGILA | NMG 

KCB Group #ticker:KCB shareholders are set to get a Sh10.7 billion dividend payout after the lender posted a 21.8 percent jump in net profit. The increased earning was helped by lower operating costs and a drop in loan loss provisions.

The bank, Kenya’s biggest by assets, Wednesday announced Sh24 billion net profit for the year ended December 2018 compared with Sh19.7 billion earned in 2017.

The performance saw the bank declare a final dividend of Sh2.50 per share, bringing the total full-year payout to Sh3.50 per share. The dividend payout is a 16.7 percent increase or Sh1.5 billion more on the Sh9.1 billion paid in the full-year ended December 2017.

KCB’s interest income grew by four percent to Sh66.3 billion from Sh63.7 billion posted in 2017.

Non-interest income, mainly from fees and commissions, remained flat at Sh23 billion.

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The lender’s earnings were lifted by lower provisions for bad debts, which dropped by half to Sh2.9 billion.

Group chief executive Joshua Oigara termed it a “strong performance” in a regime of interest rate controls.

“This was on the back of solid operating income of Sh71.8 billion—largely from interest income, fees and commissions— and lower costs which reduced one percent to Sh34.7 billion during the period,” said Mr Oigara.

“Our focus on customers, as well as our diversified business model and strong risk discipline helped us to produce another solid year of financial performance in 2018, even as we navigated the pressures of interest rates cap in Kenya and economic volatility in some of our subsidiaries.”

KCB chief financial officer Lawrence Kimathi said the lender had embarked on an aggressive recovery of bad loans, a move that paid off for the lender. “We recovered about Sh9 billion in the period,” he said.

Digital solutions

The bank’s gross non-performing loans decreased 13.51 percent to Sh32 billion.

The lender is banking on innovation and new digital solutions to meet “the fast-changing consumer expectations.”

KCB becomes the second bank after Stanbic Holdings to announce a growth in full-year results.

Stanbic on Friday last week posted 45.5 percent jump in net profit to Sh6.27 billion for the full year ended December 2018 buoyed by growth in both interest and non-interest income. The results by the two lenders mirror the Central Bank of Kenya (CBK) indicators that show commercial banks recorded a rise in earnings last year.

Kenyan banks’ total pre-tax profits hit a record high of Sh152.3 billion last year, surpassing the previous earnings peak reported before the introduction of interest rate controls slightly more than two years ago, according to the CBK report.

Group chief executive Joshua Oigara.

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