KCB Group posts 20.9% jump in net profits

In a significant development within the banking sector in Kenya, listed lender KCB Group announced a remarkable increase in its net profits. The bank's net income surged to $30.4 billion in the nine-month period under review, a substantial jump from $25.1 billion the previous year. Concurrently, Stanbic Bank Kenya made waves with the announcement of the appointment of Joshua Oigara, a well-known serial banker, as its new CEO for both Kenya and South Sudan. To delve deeper into these thrilling revelations, CNBC Africa hosted Jesse Ludenyo, Lead Research Analyst at Amana Capital, and David Chesire, Associate Economist at Mentoria Economics for insights. Ludenyo began by highlighting the impressive financial performance of KCB Group, noting a 20.9% growth in profit before tax and a 21.37% increase in profit after tax. While these numbers reflect positive income growth, he also identified challenges, particularly concerning the bank's capital ratios. The capital adequacy ratios, including the core capital to total liability and core capital to total risk rates, exhibited a gradual decline. This decline was linked to liquidity issues, evident in the year-on-year decrease in the liquidity ratio from 41% to 38%. Ludenyo attributed this performance to the incorporation of Bank Popular into KCB's books. However, KCB's declaration of dividends, a noteworthy move after a hiatus in the previous fiscal results, is expected to attract investor interest. Ludenyo anticipated a positive impact on the share price, providing short-term gains while underlining the need for enhanced capital efficiency to sustain long-term investment. Chesire struck an optimistic note, observing a resurgence in the East African banking sector post-COVID. He specifically commended KCB for its retail sector performance, citing a 15.3% revenue increase. In line with Ludenyo's assessment, Chesire acknowledged rising costs but also praised KCB's regional expansion strategy, including ventures into South Sudan, Ethiopia, and the recent acquisition of Trust Merchant Bank in the DRC. Moreover, KCB's commitment to empower women through a substantial investment plan signaled a concerted effort to strengthen its market position. Chesire believed that KCB's emphasis on digital lending, exemplified by products like Fuliza, positioned the bank for sustained growth in the upcoming year. Ludenyo weighed in on the underperformance of KCB and MPESA, attributing it to short-term issues like line deactivations by Safaricom. However, he remained optimistic about the product's long-term prospects, particularly due to strategic partnerships with entities like NCBA. The discussion shifted to Joshua Oigara's upcoming leadership role at Stanbic Bank, with both Ludenyo and Chesire lauding his track record in fostering partnerships and driving innovation. Oigara's expertise is expected to play a pivotal role in Standard Bank's quest to modernize and digitize its operations to compete effectively within the regional banking landscape. Overall, the industry experts' consensus pointed towards a hopeful outlook for KCB Group and the broader Kenyan banking sector, underpinned by robust financial performance, strategic expansion initiatives, and visionary leadership.