Banks in Ethiopia: KCB Group has set a new profit record in the banking sector. This is after the bank posted a full year net profit of Sh. 24 billion. This represented a 21.8 per cent jump from the Sh. 19.7 billion net profit the bank made in the 2017 financial year.
Following this gain, the bank has announced that its shareholders will get dividends worth Sh. 10.7 billion. This is equivalent to Sh. 2.50 per share. It also means that for the full year 2018, shareholders will have received total dividends of Sh. 3.50 per share.
The bank has also announced that it is seeking to become the first Kenyan lender to venture into the Ethiopian market. In early 2018, the bank announced that it was preparing to enter the market of 100 million people through a partnership with an Ethiopian bank or opening a fully-fledged subsidiary in the country, which currently has no foreign bank. Currently, KCB operates regional subsidiaries in Rwanda, Burundi, South Sudan and Tanzania.
This overall positive performance by KCB has been largely attributed to lower operating costs and a drop in loan loss provision. During the year, KCB was able to recover Sh. 9 billion in bad loans. The bank’s gross non-performing loans decreased 13.51 percent to Sh. 32 billion.
The bank’s interest income grew by four percent to Sh. 66.3 billion from Sh. 63.7 billion posted in 2017. Non-interest income, mainly from fees and commissions, remained flat at Sh. 23 billion.
The lender’s earnings were lifted by lower provisions for bad debts, which dropped by half to Sh. 2.9 billion.
“This was on the back of solid operating income of Sh. 71.8 billion—largely from interest income, fees and commissions— and lower costs which reduced one percent to Sh. 34.7 billion during the period,” KCB CEO Joshua Oigara said.
“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.”
