Kenya Commercial Bank Profit Climbs 17% After Loans IncreaseEric Ombok
Kenya Commercial Bank Ltd., the East African nation’s second-biggest lender by market value, said 2014 profit increased 17 percent after loans jumped, beating analysts’ estimates.
Net income climbed to 16.8 billion shillings ($184 million) from 14.3 billion shillings a year earlier, Chief Executive Officer Joshua Oigara told reporters Thursday in the capital, Nairobi. The median estimate of nine analysts surveyed by Bloomberg was for 16.7 billion shillings.
“The future of the group is growing to 10 million customers” from 4 million now, Oigara said. “It’s a two-year target.”
Kenya, East Africa’s largest economy, expanded by 5.3 percent last year and is forecast to grow 6.2 percent in 2015, according to the International Monetary Fund. Government spending on infrastructure projects is helping to drive the gains, with President Uhuru Kenyatta pledging to build a second international airport, double the network of paved roads and construct a railway from the port of Mombasa to the Ugandan border.
The bank’s full-year net interest income, the money earned from charges on loans, gained 8.9 percent to 35.9 billion shillings as total lending grew 25 percent.
“The economy is expanding much faster and we are just taking advantage of opportunities in the market,” Oigara said.
KCB, as the lender is known, is Kenya’s largest bank by outlets. It has the biggest presence in neighboring countries including South Sudan, Tanzania, Uganda, Rwanda and Burundi. These units contributed 10 percent of earnings compared with 11 percent a year earlier because of political upheaval in South Sudan.
“It is a really strong set of results even after they suppressed the profit by taking quite a large provision,” Aly-Khan Satchu, the chief executive officer of Nairobi-based Rich Management Ltd., an adviser to companies and wealthy individuals, said by phone.
KCB increased its provisions for loan coverage to 56 percent from 42 percent a year earlier, even after bad debts fell to 6.3 percent from 8.1 percent.
The bank’s shares have gained 5.3 percent so far this year, underperforming an 8.9 percent increase in the FTSE NSE Kenya 25 Index.