KCB Group Reports Flat Q1 2025 Profit Amidst Asset Quality Pressures

KCB Group Plc reported a net profit of KSh 16.5 billion for the first quarter of 2025, essentially flat compared to KSh 16.5 billion in Q1 2024.

This performance comes despite ongoing pressures on asset quality, reflected in a rising non-performing loan (NPL) ratio.

The lender’s net loan book expanded by 9% to KSh 1.02 trillion, while customer deposits remained stable at KSh 1.43 trillion.

Net interest income saw a 9% increase to KSh 33.7 billion, driven by robust credit expansion and income from government securities.

However, non-funded income declined by 10% to KSh 15.7 billion, impacted by subdued foreign exchange and transaction activity.

Operating expenses rose marginally, pushing the cost-to-income ratio to 45.8% from 43.3% in Q1 2024. The NPL ratio increased to 19.3% from 18.2%, highlighting persistent credit risk challenges.

Q1 2025 Performance Summary

Subsidiary Performance Highlights

• Rwanda: Recorded KSh 1.6 billion Profit After Tax (PAT), a 30% year-on-year increase, with loan book growth of 12% primarily driven by SME lending.
• Tanzania: Delivered KSh 860 million PAT and reduced its cost-to-income ratio to 49% from 54%.
• DRC (TMB): Generated KSh 2.1 billion PAT and KSh 5.4 billion in operating income, boosted by FX trading.
• Burundi: Increased deposits by 15% to KSh 13.8 billion, maintaining PAT at approximately KSh 200 million.
• Uganda: Profit declined by 14% to KSh 600 million as loans contracted by 5% due to tighter risk controls.
• South Sudan: Posted KSh 90 million PAT, with deposits rising 10%, indicating resilience in its retail franchise.

Over the past six years, KCB Group has doubled its net loan book and nearly tripled total assets, while profit has steadily climbed.

However, the consistent rise in the NPL ratio emphasises growing asset quality concerns.

Dividend Payout Approved

KCB Group shareholders, at their Annual General Meeting (AGM) held in Nairobi on Thursday, approved a total dividend payout of KSh 9.6 billion for the 2024 financial year.

The dividend will be paid on May 23, 2025, to shareholders registered by the close of business on April 3, 2025. This, combined with an interim dividend of KSh 1.50 per share paid on October 23, 2024, brings the total dividend for 2024 to KSh 3.00 per share.

Group Chairman Joseph Kinyua remarked during the AGM, “Amidst a challenging operating environment, KCB Group remains committed to supporting businesses, individuals, and communities to weather the challenges and, where possible, provide opportunities for growth through its regional footprint and diverse products, services, and solutions.”

KCB Group CEO Paul Russo added, “Based on our performance for the year and our commitment to providing our shareholders with long-term sustainable value from their investment, the Group proposed the payment of interim and final dividends while ensuring adequate capital retention for growth and regional expansion.”

Strategic Developments

Total revenues for Q1 2025 rose by 2% to KSh 49.4 billion. The group’s balance sheet reached KSh 2.03 trillion, up from KSh 1.99 trillion, supported by a stable loan portfolio.

Profit before tax contributions from subsidiaries outside KCB Bank Kenya improved to 32%, underscoring the Group’s focus on regional expansion.

The bank also confirmed that the sale of the National Bank of Kenya (NBK) to Access Bank is in its final stages. KCB received regulatory approval from the Central Bank of Kenya in April to proceed with the transaction.

Additionally, the Cabinet Secretary for the National Treasury and Economic Planning approved the transfer of certain assets and liabilities of NBK to KCB Bank Kenya, in accordance with Section 9 of the Banking Act.

In 2024, KCB disbursed KSh 53.2 billion in green loans and screened loans worth KSh 513 billion using its Environmental and Social Due Diligence (ESDD) tool, demonstrating its commitment to sustainable finance.