Diversification strategy pays off for KCB Group, with the Rwandan business amalgamation resulting in the creation of the second-largest bank in the market.
KCB Group's return on equity remained among the highest in the banking sector at the Nairobi Securities Exchange, growing by 60 basis points to reach 23 percent. This was revealed in the company’s 2022 integrated report and financial statements.
Group Finance director Lawrence Kimathi said, in the company’s integrated report and financial statements, that the Group achieved a record performance in 2022 propelled by recovery in economic activity across the region.
“Inflation was a big concern across the region, with most regulators increasing interest rates in a bid to control it. We also witnessed major pressure on regional currencies especially in Kenya, which coupled with a shortfall in supply of hard currency exacerbated the situation. Notably, South Sudan, the Democratic Republic of the Congo [DRC], Rwanda, and Kenya outperformed the regional average, contributing to KCB Group's success,” he explained.
Financial results showed that assets grew by 36.4 percent to Kshs. 1.55 trillion by the end of 2022. This growth was attributed to both organic performance and acquisitions. Profit after tax also rose by 19.5 percent to Kshs. 40.8 billion for the year, driven by increased funded and non-funded income streams.
“Earnings per share increased by 19.8 percent to close the year at KShs. 12.71. The contribution to overall assets and profit before tax by other subsidiaries excluding KCB Bank Kenya increased to 37.5 percent and 17.0 percent, respectively,” Lawrence said.
He added, “We registered year on year reduction in nonperforming loans across our subsidiaries except for KCB Bank Kenya whose corporate banking book was severely impacted by downgrades in the roads, hospitality, and manufacturing sectors.”
The Group made strategic moves to increase the contribution of subsidiaries outside of Kenya to its profits. Reorganisation efforts were undertaken in Kenya's investment and wealth management businesses, while in Rwanda, business amalgamation resulted in the creation of the second-largest bank in the market. Furthermore, the acquisition of an 85 percent stake in Trust Merchant Bank in the DRC opens doors to significant trade opportunities within East Africa - and bolstered its balance sheet.
“KCB Group can now unlock the large trade opportunities that exist within the various trade routes cutting across from the Indian to the Atlantic Ocean, teeing us up very well to deliver significant increase in contribution made by subsidiaries outside of Kenya,” Lawrence noted.